Tong Ren Tang Medical Care and Wellness (02667.HK) cornerstone investors have locked in over 46%, as the subscription for the first century-old Chinese medicine company's IPO enters its final countdown.

This leading traditional Chinese medicine healthcare service company with a 356-year brand heritage is recently preparing for an IPO in Hong Kong, backed by an “old brand” and completing the final piece of the Tongrentang Group’s “pharmaceuticals-retail-healthcare” ecosystem. The global offering includes 108 million shares, with approximately 10% in Hong Kong public offering and about 90% in international offering. Cornerstone investors have locked in over 46% of the issue size, with the cornerstone lock-up ratio nearing the maximum limit.

Institutional Investment: High Cornerstone Ratio and Strong Participation

Data is the most honest indicator.

According to the prospectus, cornerstone investors Airport Harbour Technology Capital (Hong Kong) and Aurora SF will subscribe for shares worth about HKD 389 million at the offering price, accounting for over 46% of the global offering. This ratio is relatively high among recent Hong Kong IPOs. A high cornerstone lock-up ratio means limited freely tradable shares post-listing, providing stronger support for the secondary market price. Additionally, the lock-up period exceeds the traditional six months, further boosting market expectations.

Very Low Customer Acquisition Cost: Only One-Sixtieth of Industry Peers

In the healthcare service industry, customer acquisition cost is a key variable determining profit ceiling.

Tongrentang Healthcare leverages the well-established “Tongrentang” brand founded in 1669. The economic value of its brand barrier can be summarized with one figure: in 2024, marketing expenses account for only about 0.2% of revenue. Yet, the number of medical visits surged from 1.321 million in 2022 to 2.977 million in 2024, with a CAGR of 50.1%. In the first nine months of 2025, visits reached 2.536 million, a 21.5% increase year-over-year. Memberships grew from 436,000 to 767,000 (as of September 2025), with strong repeat purchase loyalty.

As revenue scales up, every dollar spent on marketing by peers can almost directly translate into profit for Tongrentang Healthcare. This forms a moat that competitors cannot replicate in the short term.

Profitability Turning Point Confirmed: Adjusted Net Profit Up 29%

For growth-oriented companies approaching listing, investors are most concerned about whether profit trends are upward or downward.

The answer is clear—upward and accelerating.

Financial data shows the company has demonstrated solid profitability. From 2022 to 2024, it shifted from a loss of HKD 9.23 million to a profit of HKD 46.2 million, with an adjusted net profit of HKD 61.73 million, a 29% increase. Gross profit grew from HKD 143 million to HKD 222 million, with a CAGR of 24.8%. In 2024, cash conversion rate was 87.2%, interest-bearing debt ratio was only 11.56%, and cash holdings reached HKD 225 million, indicating significantly improved profit quality.

Tongrentang Healthcare’s current development stage is highly similar to that of Gushengtang at its IPO, with profitability just beginning to release, and the fastest growth phase may still be ahead.

Replication Growth Phase: Planning to Add 20 New Medical Institutions

Traditional Chinese medicine healthcare is the company’s core performance driver. It has built a tiered diagnosis and treatment network comprising 25 medical institutions, including 12 owned clinics, 12 managed clinics, and one internet hospital providing online consultation services. As of 2024, patient visits totaled about 3 million, with a CAGR of 50.12%; in the first nine months of 2025, visits reached approximately 2.536 million, up 21.5% year-over-year. Memberships number around 740,000, with over 500 partner pharmacies.

As the core business expanding within Tongrentang Group, the scale of healthcare services still needs stronger support and further expansion. According to its fundraising plan, the company intends to acquire five new medical institutions, establish five more via a light-asset model, and provide management services to an additional 5-10 institutions. This clear strategic plan involves “acquisition + light-asset development + management outsourcing” working in synergy.

Beyond “Celebrity Doctors”: Relying on a Standardized “System-Driven” Model

For traditional Chinese medicine healthcare companies, the biggest growth bottleneck is whether “famous doctors can be replicated.” Tongrentang Healthcare is addressing this with a systematic approach.

The company has extended upstream by building its own supply chain, completing an end-to-end industry chain loop. Beyond pharmaceuticals, it has commercialized health product sales, leveraging brand value. It has been authorized to exclusively sell Tongrentang’s popular Angong Niuhuang Wan series in Zhejiang Province. As of the latest feasible date, it has sold health products and other items to over 4,000 institutional clients.

Furthermore, the company has embedded cloud digital systems into every healthcare facility, using real-time data analysis and management to replace “hospital directors” with intelligent systems, transitioning toward a “human-machine collaborative” new chain management model. This reduces reliance on individual famous doctors’ “personal governance” and instead relies on replicable operational systems, digital platforms, and talent development mechanisms to achieve scaled, standardized expansion.

AI + Traditional Chinese Medicine: Deep Data Barriers in Medicine

As the only strategic player in traditional Chinese medicine services within Tongrentang Group, Tongrentang Healthcare stands at a pivotal point where traditional Chinese medicine intersects with artificial intelligence. Recently, Tongrentang Group has actively promoted AI applications in TCM, partnering with Xiaomi to develop the “AI Intelligent TCM Health Service Agent,” integrating traditional wisdom with modern AI technology to create a closed-loop of “consultation—recommendation—service—medication.”

Looking ahead, the trillion-yuan scale TCM healthcare market is entering a golden window for industry consolidation. With a multi-cycle growth model, solid financial foundation, and forward-looking AI deployment, Tongrentang Healthcare has not only completed the last piece of the “old brand” capital puzzle but also opened a new era of deep integration between traditional Chinese medicine services and cutting-edge technology.

With funds raised from the IPO, Tongrentang Healthcare is expected to accelerate its core AI transformation, continuously consolidating its leading position in the trillion-yuan TCM healthcare market and leading the industry into a new era of intelligence.