Beijing Tongrentang Medical & Healthcare Investment Co., Ltd. submitted its listing application to the Hong Kong Stock Exchange on June 30. Should the IPO succeed, this would become the fourth listed entity under the Tongrentang Group umbrella alongside Beijing Tongrentang (600085.SH), Tongrentang Technology (01666.HK), and Tongrentang Pharmaceutical (03613.HK).
As China's largest non-public Traditional Chinese Medicine hospital group by patient volume, Tongrentang Medical & Healthcare commands a 1.7% market share. The company operates through three core segments: proprietary medical services covering common/chronic disease treatment and health management; standardized operational support for non-profit institutions; and exclusive distribution rights for Tongrentang Angong Niuhuang Pill series in Zhejiang province. Medical services generated 84%-89.4% of its 2022-2024 revenue, totaling between RMB815 million and RMB988 million annually.
Financial performance reveals an acquisition-driven turnaround strategy. After recording combined net losses of RMB21.45 million during 2021-2022, the company achieved profitability through strategic takeovers. Its 2022 acquisition of Sanxitang Healthcare Center and Sanxitang TCM Pharmacy contributed significantly, accounting for 21.9%-31.8% of total revenue and 41.3%-44.8% of gross profit during 2022-2024. Subsequent purchases of Shanghai Chengzhitang (70% stake) and Shanghai Zhonghetang (60% stake) in 2024 further boosted medical service revenue by over 3% YoY in early 2025.
This expansion strategy has substantially increased goodwill liabilities. From RMB26 million in 2021, goodwill surged to RMB263 million by 2024—representing 37% of net assets and exceeding the 30% safety threshold recognized by markets. The company acknowledges in its prospectus that potential goodwill impairment could materially impact financial performance.
Dependency on its parent company presents additional challenges. The "Tongrentang" trademark license expires in April 2026 and requires renewal compliance with listing regulations. Crucially, the agreement permits termination if Beijing Tongrentang's post-IPO stake falls below 33.34%. Internal acquisitions have also shaped the business, including the zero-cost transfer of Beijing Tongrentang Hospital which consistently contributes over 30% of total revenue.
Financing pressures are mounting as debt-to-asset ratios climbed from under 10% in 2021 to 35.1%-45.2% during 2022-2024. The company has pledged acquired assets—including Sanxitang's equity and Shanghai Chengzhitang's 70% stake—as collateral for bank loans totaling RMB142 million outstanding by April 2025. Despite maintaining RMB293-326 million in cash equivalents, planned acquisitions of five additional institutions before 2029 necessitate capital infusion. The IPO prospectus explicitly allocates proceeds toward repaying acquisition-related bank debt, underscoring the urgency reflected in three listing applications since June 2024.
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