We are the leading medical group in China specialized in providing hair-related healthcare services in terms of total revenue for 2020. We offer one-stop hair-related healthcare services covering hair transplant, medical hair care, and routine hair restoration and other ancillary services. According to Frost & Sullivan, we are the largest player in China’s hair transplant service market with a market share of 10.5% and medical hair care service market with a market share of 4.3%, in terms of total revenue derived from the relevant services in 2020. Among all hair-related healthcare service providers in China, we ranked first in terms of the number of registered physicians at the end of 2020, the number of clinics in operation at the end of 2020, and the number of hair transplant patients for 2020, according to Frost & Sullivan. We adopt a standardized and scalable business model to operate a hair transplant chain consisting of mostly self-operated clinics. As of the Latest Practicable Date, we operated 53 clinics in 52 cities nationwide, making us the largest and most extensive hair transplant clinic chain in China, according to Frost & Sullivan. During the Track Record Period, we opened 29 new clinics in mainland China and acquired one clinic in Hong Kong, achieving the fastest growth among all hair transplant clinic chains in China and further widening our lead over the runners-up.
Through decades of dedication and commitment to China’s hair-related healthcare industry, we have made Yonghe Hair Transplant (雍禾植髮) a well-known and highly trusted brand among its peers, and have promoted many major developments and advancements in the industry. In 2010, we became the first ISO-certified hair transplant service provider in China, and by the end of 2017, we had successfully opened 22 hair transplant clinics across China. In 2017, we obtained investment from CITIC PE, who helped us enhance our corporate governance and further expand our business. In 2017, we acquired the mainland China business of Svenson, a globally renowned brand originated from London that had over six decades of experience in offering hair restoration products and services. From 2018 onwards, leveraging our strong medical service capabilities and Svenson’s extensive experience in hair restoration, we strategically took inroads into the medical hair care service sector and successfully established a Svenson Medical Hair Care Center (史雲遜醫學健髮中心) in each of our clinics in mainland China under a “shop-in-shop” model. During the Track Record Period, we derived a majority of our revenue from providing hair transplant services, and a substantial and increasing portion of our revenue from providing medical hair care services. We also expanded our footprint outside the mainland China in May 2021 by acquiring the Hong Kong business of Nu/Hart Hair (顯赫植髮), a renowned hair transplant service provider originated from the U.S. In addition, through our cooperation with prestigious universities such as Sun Yat-sen University, we are blazing a trail toward collaborative research and development with academia and showing the way forward for the hair-related healthcare service industry. We believe that by breaking those new grounds, we are enhancing our core competitiveness and further strengthening our leading position in the industry.
We have been persistently specializing in the hair-related healthcare service market. Driven by the soaring prevalence of hair problems in China, the increasing disposable income per capita of Chinese residents and elevated self-awareness of appearance, China’s hair-related healthcare service market is expanding rapidly. According to Frost & Sullivan, the size of the hair-related healthcare service market in China reached RMB18.4 billion in 2020, and is projected to grow to RMB138.1 billion in 2030 with a CAGR of 22.3%. China’s hair-related healthcare service market consists of two main parts — the hair transplant service market and the medical hair care service market. Hair transplant is a surgical treatment for hair loss, i.e., alopecia. According to Frost & Sullivan, approximately 250.9 million people suffered from alopecia in China in 2020. Medical hair care integrates various non-surgical treatment methods, such as medical devices and medications, and is able to address the diversified needs of a larger patient pool with various scalp and hair problems. According to Frost & Sullivan, China’s hair transplant service market reached RMB13.4 billion in 2020, and is projected to grow to RMB75.6 billion in 2030 with a CAGR of 18.9%. China’s medical hair care service market is still at an early stage of development with a market size of only RMB5.0 billion in 2020, but is believed to harbor huge growth potential and is expected to grow to RMB62.5 billion in 2030 at a CAGR of 28.7%. We are the largest service provider in each of hair transplant service market and the medical hair care service market in China by revenue derived from the relevant services in 2020, with a leading market share of approximately 10.5% and 4.3%, respectively, according to Frost & Sullivan. With our industry-leading prowess in medical examination and diagnosis, and continuing innovation in product and service offerings, we believe we are well-positioned to capture the huge growth potential of China’s hair-related healthcare service market.
Our in-house professional medical staff is at the core of our hair-related healthcare services. Leveraging our standardized and proven physician training system, as of the Latest Practicable Date, we had built a professional medical team consisting of 1,233 members, including 246 registered physicians and 919 nurses. By standardizing our diagnostic and therapeutic service system, we are able to provide consistent, high-quality medical services and achieve rapid expansion of clinics without compromising the quality of service.
Leveraging our standardized and highly scalable business model, we have achieved industry-leading operational capabilities, enabling us to effectively control costs, boost operational efficiency and improve profitability. During the Track Record Period, our gross profit margin remained largely stable, while our administrative expenses as a percentage of our total revenue continued to decrease.
We have built a one-stop shop for medical hair care services to meet the medical demands of a wide rage of patients. We continue to improve our diagnostic, therapeutic, and research and development capabilities by collaborating with experts from Class IIIA hospitals and renowned academic institutions. In addition, in order to continuously improve medical service to patients, to stay ahead of the technological curve and to propel business development, we have always been actively promoting and adopting new technologies in our business, including data usage and analysis, intelligent services and online services. We believe that such strengths have reinforced our industry-leading position and will sustain our growth momentum into the future.
We experienced significant growth during the Track Record Period. Our total revenue increased by 31.1% from RMB934.3 million in 2018 to RMB1.22 billion in 2019, and grew by another 33.8% to RMB1.64 billion in 2020. For the six months ended June 30, 2021, our revenue amounted to RMB1.05 billion, representing an increase of 75.1% as compared to the corresponding period in 2020. While our revenue was generated mainly from rendering hair transplant services, revenue from medical hair care services grew rapidly over the same period. We recorded a net profit of RMB53.5 million in 2018, RMB35.6 million in 2019, RMB163.3 million in 2020 and RMB40.4 million in the six months ended June 30, 2021. The total number of patients receiving our treatments increased by 41.7% from 35,177 in 2018 to 49,851 in 2019, and further increased by 82.7% to 91,069 in 2020. In the six months ended June 30, 2021, the total number of patients receiving our treatments reached 68,112. Our clinics’ average initial breakeven period is approximately three months and their average cash payback period is approximately 14 months, better than the average for private medical institutions in China, according to Frost & Sullivan.
Source: Yonghe Medical (02279) Prospectus (IPO Date : 2021/12/01) |