Core Viewpoint - Yonghe Medical emphasizes integrity as a fundamental principle for long-term success in the medical industry, which has contributed to its recent financial turnaround and growth in consumer trust [1][5]. Financial Performance - In the first half of 2025, Yonghe Medical reported revenue of RMB 861.6 million, with a gross profit of RMB 550.3 million, reflecting a year-on-year growth of 3.9% [1]. - The gross margin increased from 58.8% to 63.9%, a rise of 5.1 percentage points [1]. - The company achieved a net profit of RMB 27.9 million, recovering from a loss of RMB 138.6 million in the same period last year [1]. Industry Context - The medical beauty industry faces significant trust issues, with 34.1% of consumers citing inconsistent qualifications and 33.2% concerned about unclear physician credentials as major pain points [3]. - There are approximately 13,000 to 15,000 legal medical beauty institutions in China, compared to around 80,000 illegal or unlicensed ones, highlighting a significant trust gap [3]. - In the hair transplant sector, the lack of qualified professionals has led to the emergence of non-compliant medical institutions, further eroding consumer trust [3][4]. Regulatory Environment - The 2023 guidelines from the National Market Supervision Administration emphasize strengthening credit constraints and enhancing industry transparency to combat malpractice in the medical beauty sector [4]. - The regulatory focus aims to eliminate "black institutions" and "black doctors," ensuring a fair market environment for compliant medical beauty institutions [4]. Consumer Trust and Business Strategy - Yonghe Medical's commitment to integrity has resulted in high consumer satisfaction, with a recommendation rate of 92% among its hair transplant users, significantly above the industry average [5]. - The company integrates integrity into its business model by establishing a transparent doctor system, pricing structure, and service framework [8]. Innovations in Service Delivery - Yonghe Medical has implemented a "three transparency" commitment from its doctors, rejecting shadow doctors and illegal practices [9]. - The company has introduced a transparent pricing model, allowing consumers to confirm costs without complex calculations [9]. - Yonghe Medical pioneered live-streaming of hair transplant surgeries to ensure transparency and accountability [10]. Growth Metrics - The number of consumers receiving hair transplant services from Yonghe Medical reached 33,504 in the first half of 2025, a 14.5% increase from 29,272 in the same period of 2024 [10]. Future Outlook - Yonghe Medical aims to establish integrity as a standard in the hair medical industry, ensuring consumers receive reliable and trustworthy services [11].

Core Insights - Yonghe Medical reported a revenue of RMB 861.6 million for the first half of 2025, with a gross profit of RMB 550.3 million, marking a 3.9% increase year-on-year. The gross margin improved from 58.8% to 63.9%, an increase of 5.1% [1] - The company achieved a net profit of RMB 27.9 million, recovering from a loss of RMB 138.6 million in the same period last year, resulting in a basic earnings per share of RMB 0.06 [1] - The company has crossed the breakeven point, with improvements in revenue, gross profit, and net profit, alongside ongoing optimization of store efficiency and customer structure [1] Business Performance - Single-store revenue increased by 23%, rising from RMB 11.11 million in the first half of 2024 to RMB 13.68 million [2] - The hair transplant business generated RMB 662 million, accounting for 76.8% of total revenue, with the number of consumers receiving services reaching 33,500, a 14.5% increase year-on-year [2] - The medical nurturing business, identified as a "second growth curve," served 44,900 consumers and generated RMB 187 million, representing 21.8% of total revenue, with a repurchase rate of 29.9% [2] Strategic Initiatives - The company has focused on optimizing its store network and operational resources, enhancing efficiency while maintaining steady growth [2] - Yonghe Medical's strategic upgrade of its medical nurturing product structure has led to a shift towards high-value medical packages, improving user engagement and long-term value [2][3] - The collaboration between the two core business segments has provided a sustainable foundation for profit improvement [3]

Core Insights - Yonghe Medical reported a revenue of RMB 861.6 million for the first half of 2025, with a gross profit of RMB 550.3 million, reflecting a 3.9% year-on-year growth. The gross margin increased from 58.8% to 63.9%, a rise of 5.1 percentage points [1] - The company achieved a net profit of RMB 27.9 million, recovering from a loss of RMB 138.6 million in the same period last year, resulting in a basic earnings per share of RMB 0.06 [1] - The improvement in financial performance is attributed to the company's refined management practices, including the upgrade of its self-developed chain medical management system "Hefan," which enhanced operational efficiency, quality control, and cost reduction [1] Business Segmentation - In terms of business segments, the hair transplant segment generated RMB 662 million, accounting for 76.8% of total revenue. The number of consumers receiving hair transplant services increased by 14.5% to 33,504, with a notable rise in female clients [2] - The medical nurturing segment, identified as the "second growth curve," reported a revenue of RMB 187 million, representing 21.8% of total revenue, with a consumer base of 44,912 and a repurchase rate of 29.9% [2] - Future strategies include enhancing operational precision in clinics, strengthening the central functions of the internet hospital, and focusing on technology-driven initiatives, particularly AI empowerment [2]

Company Performance - In the first half of 2025, the company reported revenue of RMB 861.6 million, with a gross profit of RMB 550.3 million, representing a year-on-year growth of 3.9% [1] - The gross margin increased from 58.8% to 63.9%, a rise of 5.1 percentage points [1] - The company achieved a net profit of RMB 27.9 million, recovering from a loss of RMB 138.6 million in the same period last year [1] Historical Context - The company experienced losses starting in 2022, accumulating a total loss of RMB 858 million from 2022 to 2024, marking three consecutive years of losses [3] - The number of stores decreased from 74 to 69, indicating a strategic optimization of underperforming locations [3] Strategic Initiatives - The company attributed its performance improvement to two main factors: optimizing store network layout, which boosted gross margin by 4.5-5.5 percentage points, and restructuring management models along with refined marketing investments, leading to a reduction in sales and management expense ratios by 6%-8% and 2%-3% respectively [3] - The company is focusing on expanding its multi-department and women's departments, with plans to establish light-asset stores in lower-tier cities [5] Market Trends - The hair health market in China is experiencing rapid growth, with the market size increasing from RMB 58.29 billion in 2020 to RMB 79.55 billion in 2023, and projected to reach RMB 116.54 billion by 2028 [4] - The company's hair transplant business generated RMB 662 million, accounting for 76.8% of total revenue, with the number of consumers receiving hair transplant services increasing by 14.5% year-on-year [3]

Summary of Yonghe Medical Conference Call Company Overview - **Company**: Yonghe Medical - **Industry**: Hair Restoration and Medical Care Key Financial Performance - **2024 Revenue**: RMB 1.805 billion, a 1.5% increase from 2023 [3] - **Gross Profit**: RMB 1.08 billion, an 8.7% increase, with a gross margin of 60.1%, up 4 percentage points from last year [3] - **EBITDA**: Turned from loss to profit at RMB 140 million [3] - **Net Loss**: RMB 227 million, a reduction of 58.6% compared to the previous year [3] - **Hair Transplant Revenue**: RMB 1.33 billion, accounting for 73.7% of total revenue [3] - **Medical Care Revenue**: RMB 450 million, a 14.8% year-on-year increase [3][4] Strategic Shifts and Business Model Transformation - Transitioned from a rapid expansion model (1.0 era) to a focus on efficiency and single-store profitability (2.0 era) [5] - Emphasized customer lifetime value and digital transformation, leading to a 20% reduction in advertising costs while increasing revenue [5][6] - Adjusted branch layout by closing unprofitable locations and focusing resources on high-potential markets [3][10] - Implemented targeted marketing strategies to enhance customer engagement and increase average transaction values [3][10] Market Position and Competitive Strategy - Addressed increased competition in the hair transplant market by introducing tiered pricing and enhancing medical care services [11] - Focused on building a strong brand reputation through content marketing and KOL collaborations [25] - Adopted a transparent pricing strategy to lower service barriers and improve conversion rates [26] Future Growth Directions - Plans to expand into hair care services and develop internet hospitals, with a focus on smaller, more efficient store models [7][12] - Aiming for a balanced growth strategy in both hair transplant and medical care sectors, with a significant focus on the latter as a future growth area [11][21] - Anticipates a stable average transaction price despite market pressures, with a focus on maintaining high service quality [16] Operational Efficiency and Cost Management - Reduced personnel costs from RMB 835 million in 2023 to RMB 723 million in 2024, achieving a significant decrease [31] - Implemented organizational restructuring to enhance efficiency and reduce costs [10][31] - Focused on retaining core talent while streamlining operations to improve overall performance [10] Digital Transformation and AI Integration - Invested heavily in digital transformation and AI applications to enhance service delivery and operational efficiency [28][29] - Launched deep sig technology to improve local business operations and customer engagement [28] - Aimed to create a comprehensive ecosystem through partnerships with upstream manufacturers and technology providers [24] Market Trends and Consumer Behavior - Noted a trend of younger consumers seeking hair restoration solutions, indicating a shift in market demographics [17] - The conversion rate from hair transplant clients to long-term care clients remains above 40% [23] - Anticipated continued growth in both hair transplant and medical care services, driven by evolving consumer needs [16][21] Conclusion Yonghe Medical is strategically positioning itself for sustainable growth by focusing on operational efficiency, digital transformation, and adapting to market trends. The company aims to enhance its service offerings while maintaining a strong financial performance amidst competitive pressures.