Produced by | Entrepreneurship Frontline

Authors | Ye Nan, Wang Zhuoran

Editor | Lightning

Designer | Xing Jing

Reviewer | Song Wen

"First stock of hair transplant" YONGHE MEDICAL achieved a turnaround in its annual performance in 2025. The net profit attributable to the parent company improved from a loss of 226.6 million yuan in 2024 to a profit of 73.56 million yuan.

Over the past three years, YONGHE MEDICAL has made comprehensive optimization adjustments around the "Heaven, Earth, and People" three networks, focusing on digital marketing, building internet hospitals, insights into segmented populations and operations, as well as restructuring the clinic structure and refining the service system.

Hair transplant has never been a rigid medical demand and has a large demand elasticity in changing economic environments. The previous reliance solely on scale expansion and heavy marketing outreach is gradually losing effectiveness.

As a leading national chain hair transplant institution, YONGHE MEDICAL feels this more deeply, and its shift has more benchmark significance for the industry.

On this occasion, "Entrepreneurship Frontline" conducted an in-depth conversation with YONGHE MEDICAL CGO (Chief Growth Officer) Ren Jian.

(Image / YONGHE MEDICAL CGO Ren Jian)

Ren Jian believes that the reversal of revenue is a systematic adjustment concerning the business model, operational model, and governance model.

This has led to a significant reduction in YONGHE MEDICAL's sales expenses over the past year: the cost of patient visits decreased by 12.2%, and the input-output ratio significantly improved by 22.6%.

The key to reducing customer acquisition costs should not solely focus on "increasing repurchase," but rather on operating the broader 90% of high-intent users outside of that.

Recently, YONGHE MEDICAL has gradually optimized a small portion of underperforming clinics, shifting towards a "1+N" model to allow for flexibility in customer unit price; and clarifying the relationship between low-frequency hair transplant and high-frequency maintenance services, which reflects a clearer thinking on the development ideas and acceptance models for different levels of consumer demand.

Another important and critical strategy is that YONGHE MEDICAL is shifting hair transplant consumption from "functional demand" to "aesthetic demand." Previously, men constituted the absolute mainstream of hair transplant recipients, but now the number of women seeking hair transplants is further increasing, with women in some core first- and second-tier cities even exceeding 50% of visits.

This means that the traditional focus on solving "baldness" as the core of functional hair transplants is no longer the absolute main force driving market growth. The core demand of the new growth engine, the female demographic, is "to become beautiful," and the conceptual changes brought about by market education may lead to a completely new exponentially growing potential market In addition, YONGHE MEDICAL is also looking to overseas markets. YONGHE MEDICAL's CGO, Ren Jian, believes that China has significant advantages in medical technology services, brand trust, and consumer costs, making it a potential global destination for hair transplantation. Currently, overseas customers account for 3% of YONGHE MEDICAL's consumer base over the past year.

The strategic shift of YONGHE MEDICAL indicates that a new cycle centered on efficiency, quality, and user value is beginning in China's hair medical industry.

YONGHE MEDICAL's impressive performance across cycles is also attributed to a series of difficult yet correct returns to common sense: abandoning blind expansion of stores and focusing on the profitability of individual stores. It keenly captures and leads changes in consumer trends, reconstructs operational efficiency with digital tools, and builds and extends the service ecosystem of the user lifecycle.

Below is the transcript of the dialogue between "Entrepreneur Frontline" and YONGHE MEDICAL's CGO, Ren Jian (with edits):

[Entrepreneur Frontline]: YONGHE MEDICAL turned a profit last year, with the reconstruction of its digital marketing system seen as a key and important role. What market observations led to this strategic shift?

[Ren Jian]: Many people ask what YONGHE did right. In fact, a fundamental change in a company's operations is always the result of systematic optimization. We are advancing primarily from three levels: optimizing the business model, iterating the business model, and reconstructing the governance model.

First, it is the optimization of the business model. In the past, YONGHE relied on scale expansion, but the economic capabilities and consumption levels of cities in China are inherently different. We previously simply replicated the expansion methods of first-tier cities to second and third-tier cities, which inevitably led to a mismatch between scale and production efficiency, resulting in losses. So the first realization is: we must respect the differentiation and diversity of the market; different cities must match different business models and product strategies.

Based on this, YONGHE's expansion model has shifted from relying on heavy asset store openings to a combination of "Sky Network + Ground Network." Wherever internet hospitals can penetrate, YONGHE can find a matching asset expansion model to operate, ultimately achieving a match between operational efficiency and scale. Therefore, you will see that YONGHE has closed some stores but has established internet hospitals. In the future, we may rely on it to open more stores in a more flexible manner.

[Entrepreneur Frontline]: What changes has digitalization brought to the specific iteration of the business model?

[Ren Jian]: The core logic of consumer healthcare in the past was heavily marketing-driven, relying on substantial marketing expenses to drive lead growth and achieve monetization. But this model is no longer viable. The traffic and demographic dividends have peaked, and the industry has shifted from incremental competition to stock competition. The core of stock competition is efficiency.

Our digital iteration proceeds in several steps:

First, we change the "target" of contact with users. In the past, advertisements directly promoted hair transplant projects. Now, YONGHE's core logic is to first create value for users, so we launched "Hair AI Intelligent Detection," allowing users to understand their hair condition first. Modern consumers are proactive explorers; they first gain awareness, and then we communicate Second, digital infrastructure is needed to achieve "personalization for everyone." On algorithm-driven information flow platforms like Douyin and Xiaohongshu, advertisements need to match different content for different users. We first segment users and analyze scenarios, then use AI technology to quickly produce a large volume of personalized advertising materials to complete the infrastructure.

Third, we need to reconstruct sales capabilities. The essence of low sales efficiency in many companies is that the tail-end sales capabilities are too weak. We extract and model the communication skills of top sales personnel, empowering AI customer service to assist or replace tail-end sales, quickly improving overall human efficiency. Users are now more accepting of highly intelligent AI because it can answer questions directly, avoiding inefficient communication caused by information misalignment between people.

In addition, during the consultation phase after users arrive at the hospital, we also introduce large models. YONGHE has the largest number of surgeries in the country, and based on this data modeling, we can quickly output solutions to assist doctors, improving the completeness and efficiency of diagnosis and treatment, thereby enhancing user experience and conversion.

[Entrepreneurship Frontline]: You also mentioned "restructuring governance models." What does this specifically refer to?

[Ren Jian]: This is very critical. There are very few truly national chain companies in the consumer medical industry; most are regional coalitions. The essential reason is that the governance capabilities of private medical institutions are "rooted" in individual hospitals or regions, lacking a strong headquarters middle platform capability. When you have 50 hospitals, the capabilities are dispersed across 50 points, making it impossible to operate in a standardized manner like mature commercial chains.

The reforms that YONGHE has promoted over the past year involve building capabilities from local to headquarters, strengthening the middle platform. All successful large commercial chains must have their core capabilities in the headquarters' chain operation system. If capabilities cannot "grow" in the headquarters middle platform, it is difficult for the scale to sustain healthy expansion.

Why can private medical institutions only open dozens of branches, with very few exceeding a hundred? The essential logic lies here. The reconstruction of governance capabilities is the true cornerstone of chain development.

[Entrepreneurship Frontline]: YONGHE has launched a brand "Fa Zhi Chu" aimed at women. What differentiated characteristics do female customers have compared to male customers?

[Ren Jian]: The female market is something we highly value. Currently, over 60% of consulting users are female, and on Xiaohongshu, the female proportion has exceeded 80%. We predict that in the next 3-5 years, the proportion of women in consulting may exceed 80%.

The biggest difference between women and men is that women move from "function" to "aesthetics." We need to first output the concept and education of "head and face aesthetics." Once they accept this concept, they will be willing to pay for related services. Female users' average transaction value will be higher because their needs are more diverse: not only hairline transplants but also eyebrow transformations, overall hairstyle design, and more In addition, women have a higher acceptance of scalp anti-aging.

【Entrepreneurship Frontline】: How do you view "nourishing and solidifying," a second curve that has been mentioned in the industry for ten years? How is YONGHE reconstructing the growth logic of the nourishing and solidifying business?

【Ren Jian】: In the past, the entire hair transplant industry has talked about "integrated planting and nourishing," which is a wrong mindset. Hair transplant is hair transplant, and nourishing and solidifying is nourishing and solidifying; they are two different businesses. Combining them will create significant problems.

Nourishing and solidifying must be the second curve. But it should be divided into two parts: one part is "post-plant nourishing" that is parasitic to hair transplant; the other part is independent, targeting the hair loss/white hair population with "medical-grade nourishing and solidifying." The latter is the real incremental market.

This year, we have already piloted "YONGHE Hair Health" small clinics in Shenzhen, which only address non-transplant medical-grade nourishing and solidifying. This exploration is possible because, on one hand, we have clarified the business model, and on the other hand, upstream products (such as biomedical technology) have begun to mature in recent years. As for the hair transplant business itself, it will also shift towards "aesthetic hair transplant" in the future.

【Entrepreneurship Frontline】: In our previous interview with a medical beauty platform, we received information that the key to reducing customer acquisition costs lies in increasing repurchase rates, thereby diluting customer acquisition costs. Does this model hold in the hair transplant field?

【Ren Jian】: From the perspective of the hair transplant industry, the starting point for reducing customer acquisition costs does not lie in repurchase. Almost all companies focus solely on developing the top tier of "high-intent users." Our shift is to start operating the remaining 90% of users outside of high-intent users through tools like "Hair AI Detection." This segment has a long operational cycle but a high lifetime value. Focusing only on immediate conversion of high-intent users will only increase customer acquisition costs. We began operating this segment last year, which is key to reducing customer acquisition costs.

Only then do we address repurchase. Repurchase should be viewed in layers; hair transplant itself is a low-repurchase business, while true high-frequency, long-term repurchase should come from the "medical-grade nourishing and solidifying" business. Therefore, separating "post-plant nourishing" and "pure nourishing and solidifying" is essential to truly understand the value of repurchase.

【Entrepreneurship Frontline】: Regarding the medium-intent population, how does YONGHE conduct online marketing? They may not be the part of the population that converts very quickly.

【Ren Jian】: This brings us to the core of "Tianwang." The incubation of the medium-intent customer group occurs on "Tianwang." YONGHE provides AI hair intelligent detection, including the soon-to-be-launched "Aesthetic Magic Mirror," which tells different people what kind of hairstyle design might be better, essentially awakening hair-related needs.

The key is the "Human Network." We will digitize labels for everyone. Users belonging to the hair transplant system will enter our hair transplant process; hair loss users will enter the hair loss process, and we will operate them using different user processes Hair transplant users emphasize a quick transaction rate, while hair loss users emphasize good solutions. Additionally, whether this user will make a repeat purchase after surgery will change their evaluation criteria completely. When designed this way, users can feel that their needs are recognized, and they are actually willing to establish further connections with the enterprise.

[Entrepreneur Frontline]: You previously mentioned that third- and fourth-tier cities mainly rely on internet hospitals, including effective links through the sky network and ground network, combined with the model of central hospitals for consultations. Could you elaborate on the collaboration logic in this process? Also, will third- and fourth-tier cities become a key focus for YONGHE in customer acquisition in the future?

[Ren Jian]: The total revenue level of the market in third- and fourth-tier cities will definitely exceed that of first- and second-tier cities in the future. The current lack of penetration is due to the absence of suitable business models and related products, not a lack of demand.

Relying solely on heavy asset stores incurs too high costs. The efficiency of internet hospitals lies in their ability to quickly penetrate third- and fourth-tier cities, allowing local users to access information, knowledge, and medical resources, thereby stimulating consumer demand. Only when sustainable consumer demand is generated can a business model be established, and stable inclusiveness can be achieved. Therefore, we place great importance on the creation of the "sky network."

[Entrepreneur Frontline]: What is your observation of the overseas market? Will this demand be met through local branches in China, or are there plans for overseas market expansion? Additionally, what are the differentiated characteristics of hair transplant demand in different overseas markets?

[Ren Jian]: The global demand is: functional repair needs are the first step, and aesthetic needs are the second step. However, aesthetic needs are significantly higher in East Asian regions such as South Korea and Japan.

China has the potential to become a global destination for hair transplants. The medical system constructed in China, whether public or private, effectively controls medical costs to a certain level, which creates the possibility for China's hair transplant industry to go global in the future.

Moreover, there is a high level of expectation and admiration for China, especially regarding biotechnology, abroad. The value of the term "China" has significantly increased. We are very confident that China can become the world's largest destination for hair transplants in the future.

[Entrepreneur Frontline]: In what specific aspects does YONGHE build data asset barriers in the field of hair health?

[Ren Jian]: Our data collection is comprehensive throughout the entire cycle. When users first come into contact, there is an initial image from AI hair detection; upon arrival at the hospital, there are professional multi-dimensional photos of follicle detection; every step of the design plan, surgery, and post-operative follow-up is recorded. From consultation to recovery, all image and video data will be completely preserved and structured.

This data can model and predict users' recovery conditions after surgery, informing users in advance what each stage will look like, greatly reducing users' post-operative insecurity and anxiety, thereby enhancing satisfaction and reducing complaints [Entrepreneurship Frontline]: Lowering the customer unit price can be combined with reduced customer acquisition costs to stimulate the flywheel effect. How does YONGHE view this?

[Ren Jian]: Lowering prices can indeed reduce the customer acquisition threshold, but it is not 100% determined by the company's willingness; it is determined by the business model. If YONGHE continues to operate under a heavy asset central hospital model, it will be difficult to reduce costs, and there will be little room for price reduction. Our "1+N" ground network model (1 refers to the central hospital, N refers to satellite clinics, which mainly undertake service delivery and direct traffic to the central hospital) aims to reconstruct the cost structure to create room for price reductions that benefit consumers. Therefore, the essence of price reduction is a result of the evolution of the business model.

[Entrepreneurship Frontline]: The service capability and organizational efficiency of the hospital department are also very important. YONGHE MEDICAL has established a five-level indicator system in the hospital department. How do you refine the execution of this set of rules?

[Ren Jian]: In a company, the business team is generally divided into upstream, midstream, and downstream. Spring and autumn are peak seasons for hair transplants. During peak and off-peak seasons, attribution can be easily inaccurate. When we break down all business indicators into a five-level indicator system, we can see if the team's third, fourth, and fifth-level indicators have changed when the consumption results are good. If not, it indicates that it does not belong to this positive attribution and may even be negative factors.

The establishment of the five-level indicator system helps each team accurately build attribution cognitive ability, allowing them to truly face and solve problems. Many teams do not acknowledge this. However, when this indicator is listed, it becomes clear whether my team has changed.

[Entrepreneurship Frontline]: You mentioned that the market ceiling for hair transplants is still very high. Can you elaborate on this?

[Ren Jian]: First, we have not fully penetrated the third and fourth-tier sinking markets through new business models. Second, there is huge overseas demand. China has the potential to become the world's hair transplant destination because we have a high-quality medical system with controllable costs, and the global recognition of "Chinese technology" is increasing. In addition, the key to breakthrough lies in shifting hair transplants from "function" to "aesthetics." When people accept hair transplants as they do with ordinary medical aesthetics, the market will greatly expand