Clinic Expansion and Operations - As of June 30, 2023, the total number of hair transplant clinics increased to 72, up from 63 as of December 31, 2022, representing a growth of 14.3%[5] - The number of mature clinics rose to 41 from 37, while start-up clinics increased to 15 from 9, indicating a focus on expanding established operations[5] - The number of hair transplant medical institutions is expected to approach 85 by the end of 2023, indicating continued expansion efforts[41] - The Group operates 72 clinics under the Yonghe Hair Transplant brand in 68 cities nationwide, making it the largest hair-related healthcare clinic chain in China[55] - The Group has established 14 Svenson hair care centers in major cities including Beijing, Shanghai, Guangzhou, and Shenzhen[55] - The Group plans to open nearly 85 hair transplant clinics in China by the end of 2023, focusing on lower-tier cities for broader geographical coverage[103] Financial Performance - Revenue from Mainland China for the first half of 2023 was RMB 825,034,000, up from RMB 743,183,000 in the same period of 2022[30] - For the six months ended June 30, 2023, the company's revenue from contracts with customers was RMB 827.8 million, representing a 10.7% increase from RMB 748.1 million in the same period of 2022[69] - Revenue from hair transplant services for the six months ended June 30, 2023, was RMB 640.8 million, an increase of 15.9% year-on-year, accounting for 77.4% of total revenue[59] - The gross profit for the same period was RMB 467.6 million, with a gross profit margin of 56.5%, down from 64.2% in the previous year[69] - The Group reported a loss before income tax of RMB 256.4 million, compared to a profit of RMB 13.3 million in the prior year[69] - The Group recorded a net loss of RMB 7.4 million, compared to a loss of RMB 1.9 million in the same period of 2022, with losses from the sale of properties amounting to RMB 4.0 million[136] - For the six months ended June 30, 2023, the Group recorded a net loss of RMB226.2 million, a significant decrease from a net profit of RMB17.6 million in the same period of 2022, resulting in a net loss margin of 27.3% compared to a net profit margin of 2.4% in 2022[155] Patient Services and Experience - In February 2023, the company upgraded its pricing strategy to a fixed-price model, enhancing transparency and accommodating diverse patient needs, which is expected to improve conversion efficiency[6][8] - The introduction of the 6S service concept aims to enhance service quality across six areas, improving the overall customer experience[12][13] - The company aims to personalize medical services through the "one-on-one with good doctor" concept, emphasizing tailored care based on individual patient needs[16] - The introduction of 24-hour exclusive butler service and dynamic service process charts at some clinics aims to further enhance user experience[12][15] - The focus on personalized services and medical hair care is expected to drive growth in the customer base, particularly among younger demographics[26] - The Group aims to enhance customer service through a smart quality inspection system for online interactions, expected to significantly improve efficiency[130] Marketing and Brand Strategy - A refined marketing strategy focused on brand value enhancement was implemented, including partnerships with popular variety shows and outdoor advertising campaigns[25] - The "Hair Forest Community Program" was launched in collaboration with Xinhuanet to improve brand communication and user experience[26] - The Group is diversifying its business strategy by enhancing membership value and creating a contextual benefits platform to improve customer loyalty and acquisition channels[113] Research and Development - The establishment of the "Peking University People's Hospital & Yonghe Medical Joint Laboratory for Hair Health" aims to enhance product R&D and treatment solutions for hair loss diseases[24] - The Group collaborates with renowned academic institutions to enhance its diagnostic, therapeutic, and R&D capabilities[48] - The development of the Yonghe Smart Clinic project is ongoing, with plans for pilot validation of 3D model-aided hair transplant solutions[130] Operational Efficiency and Technology - The company has implemented a standardized process for doctor consultations, enhancing operational efficiency and service quality[39] - The company is actively promoting the use of new technologies such as data analytics and intelligent services to improve patient care and operational capabilities[47] - The Group has adopted new technologies, including data analysis and intelligent services, to improve operational efficiency and patient care[48] - The Group plans to launch phase 1 of the "Hefan" business system to enhance clinic reception services and improve operational efficiency[130] Expenses and Liabilities - Employee benefits expenses increased to RMB 399,747, up 33.4% from RMB 299,619 in the same period last year[32] - Promotion and marketing related expenses rose to RMB 345,161, reflecting a 43.1% increase compared to RMB 240,915 in the previous year[32] - The total expenses for the period amounted to RMB 1,046,497, a significant increase from RMB 777,551 in the same period last year[32] - Total liabilities increased to RMB 1,456.9 million from RMB 1,345.1 million in the previous year[69] - The Group's inventories as of June 30, 2023, were RMB 91.2 million, an increase from RMB 88.1 million at the end of 2022[102] Capital Expenditures and Financial Position - Capital expenditures for the six months ended June 30, 2023, were RMB107.6 million, an increase from RMB101.2 million in the same period of 2022, reflecting the Group's business expansion[182] - As of June 30, 2023, the Group had cash and cash equivalents and term deposits totaling RMB632.7 million, down from RMB978.0 million as of December 31, 2022, with no bank borrowings reported[165] - Lease liabilities amounted to RMB1,073.6 million as of June 30, 2023, slightly up from RMB1,035.6 million as of December 31, 2022[186]

Financial Performance - Revenue from customer contracts for the six months ended June 30, 2023, was RMB 827,807 thousand, an increase of 10.6% from RMB 748,137 thousand in the same period of 2022[2] - Gross profit for the six months ended June 30, 2023, was RMB 467,598 thousand, a decrease of 2.5% compared to RMB 480,496 thousand in the prior year[2] - Operating loss for the six months ended June 30, 2023, was RMB 225,132 thousand, significantly higher than the operating loss of RMB 23,421 thousand in the same period of 2022[2] - Net loss for the six months ended June 30, 2023, was RMB 226,191 thousand, compared to a profit of RMB 17,629 thousand in the same period of 2022[2] - Basic loss per share for the six months ended June 30, 2023, was RMB (0.44), a decline from RMB 0.03 in the same period of 2022[2] - Total expenses for the six months ended June 30, 2023, were RMB 1,046.5 million, compared to RMB 777.6 million in the same period of 2022[32] - The company reported a net loss of RMB 226.2 million for the six months ended June 30, 2023, compared to a net profit of RMB 17.6 million in the same period of 2022, resulting in a net loss margin of 27.3%[107] - The board has decided not to declare any interim dividend for the six months ended June 30, 2023[155] Revenue Breakdown - Revenue from hair transplant medical services was RMB 640,798 thousand, up 15.8% from RMB 553,144 thousand in the same period of 2022[9] - Revenue from medical maintenance services was RMB 171,684 thousand, down 8.5% from RMB 187,628 thousand in the same period of 2022[9] - The hair transplant business generated revenue of RMB 640.8 million, representing a 15.9% increase year-over-year, accounting for 77.4% of total revenue[53] - The medical maintenance service segment generated revenue of RMB 171,684 thousand, accounting for 20.7% of total revenue, with a gross profit margin of 45.1%[72] - Revenue from hair transplant medical services was RMB 640.8 million, up 15.9% from RMB 553.1 million in the same period of 2022, driven by a 34.6% increase in patient numbers[119] Operational Metrics - Employee benefits expenses amounted to RMB 399.7 million, while promotional and marketing expenses were RMB 345.2 million for the six months ended June 30, 2023[32] - As of June 30, 2023, the company employed 1,657 professionals, an increase of 38.3% from 1,198 in the same period of 2022, including 372 doctors and 1,167 nurses[62] - The number of patients receiving hair transplant surgeries increased by 34.6% year-on-year, reaching 28,304 patients in the first half of 2023[73] - The average spending per medical maintenance patient decreased to RMB 4,212 in the first half of 2023 from RMB 4,886 in the same period of 2022[75] Assets and Liabilities - Total equity as of June 30, 2023, was RMB 1,268,548 thousand, down from RMB 1,585,310 thousand as of December 31, 2022[3] - Cash and cash equivalents as of June 30, 2023, were RMB 632.7 million, down from RMB 978.0 million as of December 31, 2022, indicating a decrease in liquidity[108] - The group's total inventory as of June 30, 2023, was RMB 912 million, compared to RMB 881 million as of December 31, 2022[128] - The group reported trade and other payables of RMB 210.6 million as of June 30, 2023, compared to RMB 144.1 million as of December 31, 2022[144] Strategic Initiatives - The company introduced a new service model called "6S service concept" to enhance user experience and service quality[59] - The company has initiated a project called "Yonghe Appraisal Officer" to gather user feedback on service quality across various service stages[61] - The company aims to enhance the quality of hair medical services by personalizing and professionalizing medical solutions based on individual patient needs[61] - The company opened 9 new hair transplant clinics in second and third-tier cities, expanding its geographical coverage to regions like Ningxia and Qinghai[76] - The group aims to expand its network of hair transplant medical institutions to nearly 85 locations by the end of 2023, focusing on lower-tier cities and enhancing coverage in first and new first-tier cities[87] - The group plans to enhance its medical and health services by introducing a wider range of products and services under the Shiyunsun brand, aiming for a more customized hair health management service[87] Research and Development - The group has established a joint laboratory with Peking University People's Hospital to advance research and innovation in hair loss treatment[82] - The group is focusing on digital technology innovations to enhance operational efficiency and patient experience, including the development of AI-driven aesthetic assessment tools[85] - The company is advancing its intelligent clinic project, aiming to implement 3D model-assisted hair transplant design and AI-assisted hair loss detection algorithms[116] Market Outlook - The hair medical service market in China is projected to grow from RMB 18.4 billion in 2020 to RMB 138.1 billion by 2030, with a compound annual growth rate of 22.3%[66] - The group is implementing a refined marketing strategy targeting the growing female customer base and increasing awareness of hair health, resulting in enhanced brand influence and business growth[84] Corporate Governance - The company is committed to maintaining high standards of corporate governance to enhance shareholder value and transparency[156] - There were no significant events after the reporting period that could impact the group[159]

Shareholding Structure - The company's total number of shares issued as of December 31, 2022, was 527,080,416[9] - ZY Investment Capital Ltd holds 161,531,916 shares, representing 30.65% of the issued share capital[14] - Yonghe Hair Service Holdings Limited holds 91,866,668 shares, representing 17.43% of the issued share capital[14] - Panmao (Shanghai) Investment Centre (Limited Partnership) holds 183,733,336 shares, representing 34.86% of the issued share capital[14] - CITIC Private Equity Funds Management Co., Ltd. holds 183,733,336 shares, representing 34.86% of the issued share capital[14] - CYH Cosmetic Medical Holdings Limited holds 91,866,668 shares, representing 17.43% of the issued share capital[14] - CPEChina Fund II, L.P. holds 183,733,336 shares, representing 34.86% of the issued share capital[14] - CPEChina Fund IIA, L.P. holds 183,733,336 shares, representing 34.86% of the issued share capital[14] - Citron PE Associates II, L.P. holds 183,733,336 shares, representing 34.86% of the issued share capital[16] - CITIC Securities Company Limited holds 184,388,336 shares, representing 34.98% of the issued share capital[16] - Frandor Limited holds 655,000 short positions and 185,531,916 long positions, representing 0.12% and 35.20% of the issued share capital respectively[16] - Trident Trust Company (Singapore) Pte Limited holds 185,531,916 shares, representing 35.20% of the issued share capital[16] - The total number of issued shares as of December 31, 2022, is 527,080,416[17] - ZY Investment Capital Ltd is wholly owned by ZY Ventures Ltd, which is wholly owned by Frandor Limited[19] - Yonghe Hair Service Holdings Limited is wholly owned by Panmao Shanghai, which is wholly owned by CITIC Private Equity Funds Management Co., Ltd[22] - CYH Cosmetic Medical Holdings Limited is wholly owned by CYH Cosmetic Medical Investment Limited, which is owned 86.3% by CPEChina Fund II, L.P. and 13.7% by CPEChina Fund IIA, L.P.[23] Equity and Share Transactions - No equity-linked agreements were entered into by the company or its subsidiaries during the reporting period[4] - No shares were purchased, sold, or redeemed by the company or its subsidiaries during the year ended December 31, 2022[5] - The company has not entered into any equity-linked agreements during the reporting period[25] Business Overview and Strategy - The company is a leading medical group in China specializing in hair medical services, offering a one-stop solution including hair transplantation, medical hair care, and other related services[32] - The Group has built a one-stop medical hair care service system to meet the medical needs of a wide range of patients, leveraging a standardized and highly scalable business model to achieve industry-leading operational capabilities[33][36] - The Group has expanded its footprint outside mainland China by acquiring the Hong Kong business of Nu/Hart Hair, a renowned hair transplant service provider from the U.S.[35] - The Group collaborates with experts from Class IIIA hospitals and renowned academic institutions to improve diagnostic, therapeutic, and R&D capabilities[33][36] - The Group actively promotes the adoption of new technologies, including data usage and analysis, intelligent services, and online services, to enhance medical services and business development[33][36] - The Group has established a Svenson Medical Hair Care Center in each of its clinics in mainland China under the "shop-in-shop" and "stand-alone shop" models[35] - The Group has made Yonghe Hair Transplant a well-known and highly trusted brand in China's hair-related healthcare industry[35] - The Group is enhancing its core competitiveness and strengthening its leading position in the industry through collaborative R&D with prestigious universities such as Sun Yat-sen University[35] - The company plans to expand the number of hair transplant medical clinics to nearly 85 by the end of 2023[50] - The company aims to enhance its nationwide medical service network by intensifying its presence in first-tier and new first-tier cities and expanding into sinking markets[51] - The company is expanding its medical hair care business, focusing on transforming hair transplant clinics into comprehensive hair hospitals in key cities[52] - The company is building a brand portfolio across the full industry chain, including "Yonghe Hair Transplant," "Svenson," "Fa Zhi Chu," and "Hafada"[52] - The company's strategy focuses on technological innovation, talent development, and improving customer service experience to adapt to market changes[63][64] - The company is transforming hair transplant clinics into comprehensive hair hospitals, with a new hospital in Shanghai already operational and one in Beijing expected to open by mid-2023[124][126] - The company is developing a digital marketing platform to improve customer acquisition and conversion efficiency, aiming to reduce marketing costs[128] - The company is enhancing its digital service platform with internet hospitals to improve online service capabilities and optimize surgery quality control systems[128] - The company is building a digital collaborative operation platform to integrate supply chain, finance, medical services, and manpower processes, aiming to improve data insight efficiency[129][133] - The company is expanding its Svenson medical hair care centers, focusing on product diversification and increasing geographic presence to enhance brand awareness and market share[118][121] Financial Performance - Revenue from contracts with customers in 2022 was RMB 1,412.8 million, a decrease from RMB 2,168.6 million in 2021[47] - Gross profit for 2022 was RMB 872.6 million, down from RMB 1,580.0 million in 2021[47] - Net loss for 2022 was RMB 85.9 million, compared to a net profit of RMB 120.2 million in 2021[47] - Gross profit margin decreased to 61.8% in 2022 from 72.9% in 2021[47] - Total assets at the end of 2022 were RMB 2,930.4 million, down from RMB 3,199.3 million in 2021[47] - Cash and cash equivalents decreased to RMB 565.1 million in 2022 from RMB 1,566.2 million in 2021[47] - Revenue for the year ended December 31, 2022, was RMB1,412.8 million, with a gross profit of RMB872.6 million and a gross profit margin of 61.8%[73][78] - Hair transplant service revenue accounted for 72.9% of total revenue, amounting to RMB1,030.5 million, with a gross profit margin of 62.4%[79][80] - Medical hair care service revenue was RMB362.5 million, representing 25.7% of total revenue, with a gross profit margin of 61.8%[79] - Revenue from hair transplant service reached RMB1,030.5 million, accounting for 72.9% of total revenue in 2022[81] - Number of patients who underwent hair transplant surgery in 2022 was 39,254, a decrease from 58,464 in 2021[83] - Average spending per hair transplant patient was RMB26,251 in 2022, slightly down from RMB26,643 in 2021[83] - Revenue from medical hair care service amounted to RMB362.5 million, representing 25.7% of total revenue in 2022[87] - Number of patients who received medical hair care service in 2022 was 63,257, with a repurchase rate of 28.2%[87][90] - Average spending per medical hair care patient increased to RMB5,731 in 2022 from RMB5,531 in 2021[90] - In 2022, the company's total revenue was RMB1,412.8 million, a decrease of 34.9% compared to 2021, primarily due to a decline in hair transplant service revenue[134] - Hair transplant service revenue in 2022 was RMB1,030.5 million, a 34.2% decrease from 2021, driven by a 40.0% drop in customer visits and 39,254 hair transplant patients[136] - The company's medical hair care service revenue in 2022 was RMB362.5 million, accounting for 25.7% of total revenue, a decrease from 26.8% in 2021[135] - Revenue from hair transplant service decreased by 34.2% to RMB1,030.5 million in 2022, with the number of patients dropping to 39,254 due to a 40.0% decline in store customer flow[137] - Revenue from medical hair care service decreased by 37.7% to RMB362.5 million in 2022, with the number of patients served at 63,257 and average spending per patient increasing to RMB5,731[140][142] - Other income from independent Svenson stores decreased slightly to RMB19.8 million in 2022[141][143] - Total costs decreased by 8.2% to RMB540.2 million in 2022, with staff costs accounting for 38.6% and amortization and depreciation charges increasing to 36.0%[145][146] - Gross profit decreased by 44.8% to RMB872.6 million in 2022, with gross profit margin dropping to 61.8% due to pandemic impacts and higher fixed costs[147][149] - Other income, including government grants and VAT credits, increased to RMB9.7 million in 2022[148][150] - General and administrative expenses increased to RMB257.5 million in 2022, with staff costs making up 65.4% of the total[151][154] - Selling and marketing expenses decreased to RMB766.8 million in 2022, primarily driven by reduced marketing and promotion expenses[156] - Marketing and promotion expenses decreased to RMB492.3 million in 2022 from RMB684.3 million in 2021, a reduction of 28.1%[157] - Net loss of RMB85.9 million in 2022, compared to a net profit of RMB120.2 million in 2021, representing a 171.4% decrease[158][161] - Cash and cash equivalents decreased to RMB565.1 million in 2022 from RMB1,566.2 million in 2021[162][163] - Net cash used in operating activities was RMB108.6 million in 2022, compared to net cash generated of RMB437.3 million in 2021[166] - Net cash used in investing activities increased to RMB650.6 million in 2022 from RMB193.9 million in 2021[166] - Cash and cash equivalents and term deposits totaled RMB978.0 million in 2022, including RMB412.9 million in term deposits[168][178] - The Group had no bank borrowings as of December 31, 2022, compared to RMB74.2 million in 2021[162][163] - Staff costs decreased to RMB225.9 million in 2022 from RMB318.9 million in 2021, a reduction of 29.2%[157] - Income tax credit of RMB23.6 million in 2022, compared to an income tax expense of RMB90.1 million in 2021[160] - The Group's net profit margin dropped from 5.5% in 2021 to -6.1% in 2022[158][161] - Capital expenditures increased to RMB243.5 million in 2022, up from RMB190.6 million in 2021, driven by business expansion[183] - Inventories rose to RMB88.1 million in 2022, compared to RMB53.1 million in 2021[183] - Trade and other payables decreased to RMB144.1 million in 2022 from RMB225.7 million in 2021, primarily due to full settlement of Nu/Hart Hair acquisition payments and reduced accrued expenses[183] - Total indebtedness stood at RMB1,035.6 million in 2022, slightly down from RMB1,046.9 million in 2021, with no outstanding bank borrowings as of December 31, 2022[186] - Lease liabilities increased to RMB1,035.6 million in 2022 from RMB947.4 million in 2021, reflecting ongoing lease commitments[186] - The Group's gearing ratio was nil in 2022, compared to 4.4% in 2021, due to the absence of bank borrowings[189] - Cash and cash equivalents denominated in foreign currencies decreased to RMB272.6 million in 2022 from RMB1,180.7 million in 2021, primarily in USD and HKD[189] - The Group had no material contingent liabilities, significant investments, or asset charges as of December 31, 2022[189] - No significant foreign currency risk was reported, as all operations, assets, and liabilities are denominated in RMB[189] - The Group did not make any material acquisitions or disposals of subsidiaries, associates, or joint ventures during 2022[189] - The company had a total of 3,741 employees as of December 31, 2022, with 1,341 being part of the professional medical team[190] - Staff costs for the year ended December 31, 2022, were RMB616.7 million, a decrease from RMB700.3 million in the previous year[190] - The company adopted a restricted share units scheme on July 26, 2022, to incentivize employees and attract talent, but no units were granted by December 31, 2022[190] - The Board resolved not to declare any final dividend for the year ended December 31, 2022[190] Operational Metrics and Expansion - The company operated 60 Yonghe Hair Transplant clinics, 3 Yonghe Fa Zhi Chu female hair transplant clinics, and 9 independent Svenson shops in 60 cities across China as of December 31, 2022[49] - The repurchase rate of the medical care business remained high at 28.2%, with an average price per customer transaction of RMB 5,731 in 2022[49] - The company operated 63 hair transplant clinics and 9 stand-alone Svenson stores across 60 cities in China as of December 31, 2022[67][75] - The number of hair transplant clinics increased from 54 in 2021 to 63 in 2022, with significant growth in tier-two and tier-three cities[71] - Stand-alone Svenson stores increased from 3 in 2021 to 9 in 2022, with new locations in Shenzhen and Guangzhou[71] - The company served 39,254 hair transplant patients in 2022[80] - The company's brand matrix includes Yonghe Hair Transplant, Svenson, Fa Zhi Chu, and Harvard, covering the full industry chain of hair-related healthcare services[67][68] - The company introduced a doctor-centric pricing system in February 2022 to enhance brand trust and patient satisfaction[80] - Company expanded its presence by opening six Yonghe Hair Transplant clinics, three Fa Zhi Chu Female Hair Transplant clinics, and six Svenson centers in 2022[93] - Total number of hair transplant clinics reached 63, covering 60 cities across 28 provinces, autonomous regions, municipalities, and special administrative regions in China as of December 31, 2022[93] - Mature-stage clinics increased to 37 in 2022 from 30 in 2021, while newly-established clinics rose to 9 from 6[95] - The company treated a total of 104,380 patients in 2022, with expectations of continued growth in demand for hair loss treatment and care[116] - The Chinese hair medical services market is projected to grow from RMB 18.4 billion in 2020 to RMB 138.1 billion in 2030, with a CAGR of 22.3%[116] - The hair-related healthcare service market in China is projected to grow from RMB18.4 billion in 2020 to RMB138.1 billion in 2030, with a CAGR of 22.3%[119] Medical Team and Physician Development - The company has a professional medical team of 1,341 members, including 294 doctors as of December 31, 2022[55] - The company launched a hierarchical diagnosis and treatment system for hair transplant physicians in February 2022[55] - The company completed the integration reform of reception and diagnosis across all medical institutions in Mainland China by June 2022[55] - The company introduced the "Physician Improvement Program" in September 2022 to enhance doctors' professionalism and service efficiency[55] - The company launched a physician value-based hierarchical diagnosis and treatment system for hair transplant physicians in February 2022, focusing on academic skills, surgical experience, and customized design standards[99] - By June 2022, all clinics in Mainland China implemented the physician consultation system, leading the industry in consultation integration reform[99] - In September 2022, the company upgraded its "Good Physician System" to the "Strong Physician Program," emphasizing technology realization, disease diagnosis, and physician value[100][105] - As of December 31, 2022, the company had 1,341 medical professionals, including 294 physicians, and established a "Hair Transplant Physician Grading and Evaluation System" with 4 appraisal indicators and 24 assessment dimensions[100][105][106] - The company developed and launched an integrated consultation management system to enhance physician consultation efficiency and digital diagnostic capabilities[104] - The company upgraded operational informatization, including appointment scheduling, intelligent hair loss area measurement, and integrated treatment processes, improving patient experience[104] - The company's medical team consists of 1,341 professionals, including 294 physicians, 959 nurses, and 88 other medical professionals (pharmacists and clinical scientists)[106] - The company developed an integrated consultation management system to improve physician efficiency and enhance digital diagnosis and treatment services[109] - The company upgraded its business operation system with IT enhancements, including smart photogrammetry for hair loss area measurement and operational data dashboards[109] Research and Development - The company is investing in cutting-edge research on stem cell technology and hair follicle cloning to explore new hair therapy solutions[56] - The company is leveraging big data, cloud computing, and AI technologies to improve diagnosis and treatment efficiency[56] - The company is developing a digital online medical platform to enhance patient-doctor communication and improve patient experience[56] - The company is optimizing hair transplantation equipment to improve surgical experiences for patients[56] - The company

Financial Performance - For the year ended December 31, 2022, the company's revenue was RMB 1,412.8 million, a decrease from RMB 2,168.6 million for the year ended December 31, 2021, representing a decline of approximately 34.8%[11] - The gross profit for the year ended December 31, 2022, was RMB 872.6 million, down from RMB 1,580.0 million in the previous year, resulting in a gross margin of 61.8%, compared to 72.9% in 2021[11] - The company reported a net loss of RMB 85.9 million for the year ended December 31, 2022, compared to a net profit of RMB 120.2 million for the year ended December 31, 2021[11] - Basic loss per share for the year ended December 31, 2022, was RMB 0.16, compared to basic earnings per share of RMB 0.29 for the previous year[11] - The company's gross profit for 2022 was RMB 872.6 million, a decrease of 44.8%, resulting in a gross margin of 61.8%, down from 72.9% in 2021[111] - The company reported a net loss of RMB 85.9 million for 2022, a decline of 171.4% from a net profit of RMB 120.2 million in 2021, leading to a net profit margin of -6.1%[121] Assets and Liabilities - Total assets as of December 31, 2022, were RMB 2,930.4 million, a decrease from RMB 3,199.3 million as of December 31, 2021[5] - Total liabilities as of December 31, 2022, were RMB 1,345.1 million, down from RMB 1,500.9 million as of December 31, 2021[5] - The company's equity attributable to shareholders was RMB 1,585.3 million as of December 31, 2022, compared to RMB 1,698.3 million as of December 31, 2021[5] - Cash and cash equivalents as of December 31, 2022, were RMB 565.1 million, down from RMB 1,566.2 million in 2021, with no bank borrowings reported[122] - The total cash and cash equivalents at the end of 2022 were RMB 565.1 million, down from RMB 1,566.2 million at the end of 2021[133] - The company had no outstanding bank loans as of December 31, 2022, compared to RMB 74.2 million in 2021[137] - The total lease liabilities as of December 31, 2022, amounted to RMB 1,035.6 million, slightly down from RMB 1,046.9 million in 2021[139] Revenue Breakdown - Revenue from hair transplant medical services was RMB 1,030,454 thousand, down 34.1% from RMB 1,565,434 thousand in 2021[41] - Revenue from medical maintenance services was RMB 362,508 thousand, a decline of 37.7% compared to RMB 582,290 thousand in 2021[41] - The company's revenue from hair transplant services for the year ended December 31, 2022, was RMB 1,030.5 million, accounting for 72.9% of total revenue[62] - Revenue from hair transplant medical services was RMB 1,030.5 million, down 34.2% year-on-year, with a patient count of 39,254, reflecting a 40.0% decrease in foot traffic[106] - Revenue from medical maintenance services was RMB 362.5 million, a decline of 37.7% year-on-year, with an average spending per patient increasing from RMB 5,531 to RMB 5,731[107] Operational Changes - The ongoing COVID-19 pandemic has led to reduced demand for the company's services, impacting operational scale[34] - The number of patients receiving hair transplant services decreased to 39,254 in 2022 from 58,464 in 2021, representing a decline of approximately 32.8%[63] - The number of patients receiving medical hair care services decreased to 63,257 in 2022 from 105,275 in 2021, while the average spending per patient increased to RMB 5,731 from RMB 5,531[83] - The company has expanded to 63 hair transplant medical institutions across 60 cities in China, making it the largest chain in the country[59] - The company established 6 new Yonghe hair transplant clinics and 3 new women's hair transplant clinics in 2022, located in Hangzhou, Beijing, and Chengdu[84] - The company implemented a doctor reception system across all medical institutions in mainland China by June 2022, leading the industry in integrated reception reform[87] Strategic Initiatives - The company continues to focus on its core business and may explore market expansion opportunities in the future[11] - The company plans to expand its hair transplant medical institutions to nearly 85 locations by the end of 2023, focusing on lower-tier cities and increasing coverage in first and new first-tier cities[97] - The company is collaborating with Sun Yat-sen University on innovative research to convert fibroblasts into hair-inducing dermal papilla cells, a breakthrough in hair restoration treatment[90] - The company launched an integrated consultation management system to enhance doctor consultation efficiency and improve patient experience through digital upgrades[93] - The company aims to strengthen its medical hair care business by expanding the product range and enhancing customer service through customized follow-up services[98] Marketing and Branding - The company introduced a refined marketing strategy focusing on enhancing brand value, resulting in an increased patient referral rate during the reporting period[89] - The company is developing a digital marketing platform to optimize customer acquisition and reduce marketing costs through data analysis[101] - The company plans to allocate approximately HKD 96.0 million for additional costs to enhance brand awareness and increase advertising and sponsorship activities[194] - The company is focused on market share expansion and accelerating the growth of its "Shiwunson" brand[194] Awards and Recognition - The company received multiple industry awards, including the Best Annual Report Award from the Hong Kong Investor Relations Association, reflecting its strong reputation and commitment to innovation[94] Future Outlook - The company has not provided specific guidance for future performance or new product developments in the conference call[11] - The company anticipates that new accounting standards will not have a significant impact on its financial statements in the foreseeable future[19] - The group continues to provide competitive compensation packages and training opportunities for employees, adhering to industry practices[168] - The group has no plans for significant future investments or acquisitions of capital assets as of December 31, 2022[165]

Business Overview - Yonghe Medical Group is a leading medical group in China specializing in hair-related healthcare services, offering a one-stop service model that includes hair transplant and medical hair care [16]. - The company has successfully established Svenson Medical Hair Care Centers in mainland China under a "shop-in-shop" model after acquiring Svenson's mainland business [19]. - Yonghe Medical Group expanded its footprint by acquiring the Hong Kong business of Nu/Hart Hair, a renowned hair transplant service provider from the U.S. [19]. - The company collaborates with prestigious universities like Sun Yat-sen University to enhance its research and development capabilities in the hair-related healthcare sector [20]. - Yonghe Medical Group has achieved industry-leading operational capabilities, enabling effective cost control and improved profitability through a standardized and scalable business model [20]. - The company is actively promoting the adoption of new technologies, including data usage and analysis, intelligent services, and online services to enhance patient care and operational efficiency [20]. - The Group's strategic initiatives are expected to reinforce its industry-leading position and sustain growth momentum in the future [20]. - The company has built a comprehensive one-stop medical hair care service system to meet diverse patient needs [17]. - Yonghe Medical Group's commitment to innovation and collaboration is aimed at driving advancements in the hair-related healthcare industry [19]. - The company continues to focus on improving its diagnostic and therapeutic capabilities through partnerships with experts from Class IIIA hospitals [20]. Financial Performance - For the six months ended June 30, 2022, Yonghe Medical Group recorded revenue of RMB 748.1 million, a decrease from RMB 1,053.4 million in the same period of 2021, representing a decline of approximately 29% [32]. - The gross profit for the same period was RMB 480.5 million, with a gross profit margin of 64.2%, down from 73.6% in 2021 [32][41]. - Net profit for the six months ended June 30, 2022, was RMB 17.6 million, compared to RMB 40.4 million in 2021, indicating a decline of approximately 56.5% [32]. - The revenue from hair transplant services amounted to RMB 553.1 million, accounting for 73.9% of total revenue, with 21,021 patients undergoing hair transplant surgery during the period [48][49]. - Medical hair care services generated revenue of RMB 187.6 million, representing 25.1% of total revenue, with a gross profit margin of 25.1% [45]. - Total assets as of June 30, 2022, were RMB 3,132.6 million, a slight decrease from RMB 3,199.3 million as of December 31, 2021 [32]. - Total equity increased to RMB 1,807.6 million from RMB 1,698.3 million in the previous year, reflecting a growth of approximately 6.4% [32]. - Cash and cash equivalents decreased to RMB 1,398.2 million from RMB 1,566.2 million, indicating a decline of about 10.7% [32]. - The Group's total revenue for the six months ended June 30, 2022, was RMB 748.1 million, a decrease of 29.0% compared to RMB 1,053.4 million for the same period in 2021 [97]. - Revenue from hair transplant services was RMB 553.1 million for the six months ended June 30, 2022, down from RMB 789.5 million in the same period of 2021 [103]. - Revenue from medical hair care services was RMB 187.6 million for the six months ended June 30, 2022, compared to RMB 254.2 million in the same period of 2021 [104]. Operational Metrics - As of June 30, 2022, Yonghe Medical Group operated 57 clinics across 56 cities in China, an increase from 52 clinics in the previous year [38][40]. - The number of patients who received hair transplant services decreased to 21,021 in the six months ended June 30, 2022, down from 29,480 in the same period of 2021, representing a decline of approximately 28.5% [51]. - Average spending per hair transplant patient was RMB 26,314 in 2022, slightly down from RMB 26,782 in 2021, indicating a decrease of about 1.7% [51]. - Revenue from medical hair care services amounted to RMB 187.6 million, accounting for 25.1% of total revenue, with a total of 38,440 patients receiving these services, down from 52,633 in 2021, a decline of approximately 27% [52][53]. - The average spending per medical hair care patient increased to RMB 4,886, compared to RMB 4,829 in 2021, reflecting a growth of about 1.2% [55]. - The repurchase rate for medical hair care services improved to 25.5% from 22.2% in the previous year, indicating enhanced customer loyalty [55]. - The company opened three new Yonghe Hair Transplant clinics and two Svenson clinics during the reporting period, contributing to a total of 57 clinics, up from 52 in 2021 [57][61]. - The number of mature-stage clinics increased to 34 in 2022, up from 24 in 2021, while newly-established clinics decreased to 6 from 11 [61]. - The professional medical team expanded to 1,198 members as of June 30, 2022, enhancing the company's service capabilities [66]. - The company implemented a physician consultation system across all clinics, aiming to improve service quality and patient trust [62][64]. - A new hierarchical diagnosis and treatment system for hair transplant physicians was introduced, focusing on evaluating physicians based on academic skills and clinical experience [65]. Market Trends and Future Plans - The hair-related healthcare service market in China was valued at RMB 18.4 billion in 2020 and is projected to grow to RMB 138.1 billion by 2030, with a CAGR of 22.3% [72][76]. - The total number of patients receiving treatments in the first half of 2022 reached 58,988, indicating a growing demand for alopecia treatment and medical hair care services [72][76]. - The company plans to have nearly 70 hair transplant clinics in China by the end of 2022, expanding its geographical coverage and presence in tier-one and new tier-one cities [77][79]. - Nine stand-alone Svenson medical hair care centers were completed in the first half of 2022, with two already in operation and four more under construction, aimed at increasing market share [78][80]. - The company has developed an integrated consultation management system to enhance physician efficiency and digital diagnosis capabilities [70][73]. - The first phase of smart hair loss area measuring software was completed, improving patient consultation experience through photo-based measurements [70][73]. - The patient referral rate has continued to increase, reflecting enhanced brand reputation and customer satisfaction [71]. - The company is focusing on a marketing strategy targeting the rapidly growing female customer base and younger demographics suffering from hair loss [71]. - COVID-19 pandemic measures led to temporary suspensions or limitations in operations for over 30 clinics, impacting revenue during the first half of 2022 [74][75]. - The company aims to leverage its market-leading position and established brand recognition to capture opportunities in the fast-growing hair-related healthcare market [72][76]. Corporate Governance and Compliance - The Audit Committee consists of two independent non-executive Directors and one non-executive Director, with Mr. Chan Peng Kuan as the chairman [159][160]. - The Audit Committee's main duties include reviewing financial information, risk management, internal control systems, and the effectiveness of the internal audit function [160]. - The Company has confirmed compliance with the Model Code for securities transactions during the six months ended June 30, 2022 [156]. - The Company has applied all applicable principles and code provisions of the CG Code except for the deviation from provision C.2.1, where the roles of Chairman and CEO are held by the same individual [157]. - The Board comprises three executive Directors, one non-executive Director, and three independent non-executive Directors, ensuring a strong independent element in its composition [157]. - The Company regularly reviews its corporate governance practices to ensure compliance with the CG Code [157]. - The unaudited consolidated financial statements for the six months ended June 30, 2022, have been reviewed and agreed upon by the independent auditors [161]. - The Company is committed to achieving high standards of corporate governance to safeguard shareholder interests and enhance corporate value [157]. Shareholder Information - As of June 30, 2022, Mr. Zhang Yu holds 161,531,916 shares, representing approximately 30.65% of the issued share capital [179]. - Mr. Zhang Hui has an interest in 24,000,000 shares, accounting for approximately 4.55% of the issued share capital [179]. - Ms. Han Zhimei is deemed to be interested in 12,000,000 shares, which is approximately 2.28% of the issued share capital [179]. - The total number of shares issued as of June 30, 2022, is 527,080,416 [180]. - Ms. Han's shareholding percentage in Shanghai Zhizhen decreased to 28.57% as of September 1, 2022, resulting in her no longer being deemed to have an interest in shares held by Zhirui [181]. - As of June 30, 2022, ZY Investment Capital Ltd holds 161,531,916 shares, representing approximately 30.65% of the issued share capital [184]. - Yonghe Hair Service Holdings Limited owns 91,866,668 shares, accounting for about 17.43% of the issued share capital [184]. - Panmao (Shanghai) Investment Centre holds 183,733,336 shares, which is approximately 34.86% of the issued share capital [184]. - CPEChina Fund II, L.P. and CPEChina Fund IIA, L.P. jointly control CYH Cosmetic Medical Investment Limited, which is approximately 86.3% and 13.7% owned respectively [196]. - CITIC Securities Company Limited owns 35% of CITIC Private Equity Funds Management Co., Ltd., which is the general partner of Panmao Shanghai [195]. - The total number of issued shares as of June 30, 2022, is 527,080,416 [188]. - Frandor Limited is a nominee shareholder for The ZY Trust and The ZH Trust, holding 185,531,916 shares [197]. - The shareholding percentages are calculated based on the total issued shares as of June 30, 2022 [188]. - The interests of substantial shareholders include both beneficial ownership and interests in controlled corporations [190]. - The company has a complex ownership structure involving multiple layers of partnerships and trusts [196]. Capital Expenditure and Utilization - Total proceeds utilization amounts to HK$1,526.2 million, with 101.6 million utilized as of June 30, 2022, and 1,424.6 million remaining unutilized [167]. - HK$642.6 million (42.1%) of the proceeds is allocated to expand and upgrade existing hair transplant clinics in China, expected to be completed by December 2025 [167]. - HK$267.1 million (17.5%) is designated for innovations in product and service offerings, also targeted for completion by December 2025 [167]. - Investment in research and development is set at HK$148.0 million (9.7%), with a completion timeline by December 2025 [167]. - HK$357.1 million (23.4%) is allocated for integrating industry resources to enhance brand awareness in China, with no specific timeline [167]. - The outstanding balance of the acquisition consideration for Nu/Hart Hair has been fully settled, with HK$24.4 million (1.6%) previously allocated for this purpose [168]. - HK$87.0 million (5.7%) is reserved for working capital and general corporate purposes, with HK$50.4 million utilized and HK$36.6 million remaining [167]. - The Group incurred capital expenditures of RMB101.2 million for the six months ended June 30, 2022, an increase from RMB93.5 million for the same period in 2021, driven by business expansion [140]. Compliance with Contractual Arrangements - The Group has adopted measures to ensure effective operation and compliance with the Contractual Arrangements, including annual reviews by the Board [198]. - The Company will disclose the overall performance and compliance with the Contractual Arrangements in its annual and interim reports [198]. - The Group entered into contractual arrangements with Beijing Xunyi and Registered Shareholders to gain effective control over the businesses operated by VIE Entities [198]. - The Board confirmed that there is no unwinding of the Contractual Arrangements or failure to unwind when the restrictions are removed [200].

Business Overview - Yonghe Medical Group is a leading medical group in China specializing in hair-related healthcare services, offering a one-stop service model that includes hair transplant and medical hair care [4]. - The company has successfully established Svenson Medical Hair Care Centers in mainland China under a "shop-in-shop" model after acquiring Svenson's mainland business, further expanding its footprint by acquiring Nu/Hart Hair's Hong Kong operations [7]. - The Group has built a scalable business model that enhances operational efficiency and profitability, allowing effective cost control [8]. - The Group's comprehensive service system is designed to meet the diverse medical needs of a wide range of patients [5]. - Yonghe Medical has established a comprehensive brand matrix centered on "Yonghe Medical," including "Yonghe Hair Transplant," "Svenson," "Yonghe Fa Zhi Chu," and "Harvard" for various hair-related services [36][37]. Financial Performance - For the year ended December 31, 2021, Yonghe Medical achieved operating revenue of RMB2,168.6 million, representing a year-over-year increase of 32.4% [27]. - The gross profit for the same period was RMB1,580.0 million, reflecting a year-over-year growth of 29.3% [27]. - Adjusted net profit reached RMB181.2 million, marking a year-over-year increase of 32.8% [27]. - The gross profit margin for 2021 was 72.9%, while the net profit margin was 5.5% [19]. - Total assets increased to RMB3,199.3 million in 2021, up from RMB1,594.4 million in 2020 [19]. - The Group's net profit decreased by 26.4% from RMB163.3 million in 2020 to RMB120.2 million in 2021, with a net profit margin dropping from 10.0% to 5.5% [139]. - Adjusted net profit increased by 32.8% from RMB136.4 million in 2020 to RMB181.2 million in 2021, with the adjusted net profit margin slightly improving from 8.33% to 8.35% [140]. Market Growth and Expansion - The hair-related healthcare service market in China was valued at RMB18.4 billion in 2020 and is projected to grow to RMB138.1 billion by 2030, with a compound annual growth rate of 22.3% [35]. - Yonghe Medical plans to accelerate the expansion of its clinic network by establishing new hair transplant clinics and comprehensive hair hospitals to capture market growth [35]. - The company aims to open 12 to 15 standalone Svenson Medical Hair Care Centers by 2022, transitioning from a "shop-in-shop" model to independent clinics [91][95]. - The company plans to expand its network of hair transplant clinics to nearly 70 locations in China by 2022 [90][94]. - The Chinese hair transplant service market is projected to reach RMB75.6 billion by 2030, driven by an expanding customer base seeking aesthetic improvements [103]. Patient Services and Experience - The total number of patients served increased by 64.5% from 91,100 in 2020 to 149,900 in 2021 [29]. - Revenue from hair transplant services was RMB1,565.4 million, an increase of 10.8% year-over-year, with 58,464 patients receiving services, up 15.3% from the previous year [60]. - Revenue from medical hair care services reached RMB582.3 million, a significant increase of 173.1%, with 105,275 patients served, representing a 78.1% increase [64]. - The average spending per medical hair care patient rose to RMB 5,531 in 2021 from RMB 3,606 in 2020, an increase of about 53% [69]. - The number of patients receiving medical hair care services increased to 105,275 in 2021 from 59,122 in 2020, representing a growth of approximately 78% [69]. - The conversion rate for hair transplant patients who continued to choose medical hair care services post-surgery was 44.6%, while the rate for those opting for hair transplant surgery after medical hair care was 4.4% [100]. Technological Advancements - The Group is actively adopting new technologies such as data analysis, intelligent services, and online services to enhance patient care and drive business development [8]. - The Group's technological advancements focus on data usage and analysis, intelligent services, and online services to improve operational efficiency and reduce costs [80]. - Innovative medical technology services offered include hair transplant without shaving, painless surgery, and intraoperative comfort care to enhance patient experience [80]. - Yonghe Medical introduced FUE technology in 2008, becoming one of the first entities to apply this advanced hair transplant technique in China [43]. Strategic Partnerships and Collaborations - Collaborations with Class IIIA hospitals and renowned academic institutions have improved the Group's diagnostic, therapeutic, and research capabilities [8]. - The ongoing commitment to research and development through academic partnerships is paving the way for future advancements in the hair-related healthcare service industry [7]. - The Group is collaborating with Sun Yatsen University on follicular regeneration technology and with West China Hospital of Sichuan University on novel targets for androgenic alopecia treatment [80]. Management and Leadership - The Group has accumulated over 10 years of experience in the medical haircare service industry, contributing to its steady expansion and leading position in China [176]. - The management team includes individuals with extensive backgrounds in both procurement and strategic development, ensuring informed decision-making [179]. - The Group's leadership is focused on fortifying its industry position and expanding its market presence in China [176]. - The board is committed to providing independent judgment and strategic insights to guide the company's future direction [187]. Challenges and Responses - The COVID-19 pandemic has led to temporary closures or limitations on customer flow in 11 clinics, impacting total revenue for 2021 [82][85]. - Despite uncertainties in the economic environment, Yonghe Medical remains committed to providing professional, high-quality, and honest services to meet patient needs [46]. - The company will continue to monitor the impacts of COVID-19 and take appropriate measures as necessary [88][92].