One of China's oldest medical names has applied to list its Tong Ren Tang Healthcare Investment unit, which is building an integrated healthcare system

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Key Takeaways:

• Top-rated non-public traditional Chinese healthcare service provider Beijing Tong Ren Tang Healthcare has kicked off its IPO, aiming to raise up to HK$897.7 million
• The company plans to acquire and build 10 medical institutions by 2029 to drive growth of its healthcare network

China's aging population is boosting demand for services like chronic disease and long-term health management, as well as rehabilitation therapies, providing a big business opportunity for traditional Chinese medicine (TCM) practitioners. As one of China's oldest medical names with over 350 years of history, Tong Ren Tang looks well positioned to cater to such demand from consumers drawn to its brand by not only nostalgia, but its deep knowledge of TCM.

Beijing Tong Ren Tang Healthcare Investment Co. Ltd. (2667.HK) is banking on demand from that and other groups to attract investors to its Hong Kong listing plan. The company launched the IPO on March 20, aiming to sell 108 million shares for between HK$7.30 and HK$8.30 each, raising net proceeds of HK$844 million ($108 million) at the middle of that range. The stock is set to make its trading debut on March 30. In its transition from "time-honored brand" to "integrated healthcare services provider," the company is targeting the entire Chinese population, and finding big business in long-term repeat patients, who often include the elderly and people with chronic conditions.

Unlike other companies from the Tong Ren Tang family, Tong Ren Tang Healthcare's strategy centers on providing a full range of TCM healthcare services, including health management and also product sales. The company provides such services from a network of 12 self-operated medical institutions, 12 managed medical institutions and one internet hospital.

The company says it improves treatment efficiency and better retains patients by integrating diagnosis, treatment, rehabilitation, referrals, and health management into a single system. In 2024, it recorded nearly 3 million online and offline out-patient and in-patient visits, ranking first in China's non-public TCM hospital healthcare services with about 1.7% of the market. At the end of last September, the company had about 770,000 patients in its membership program, reflecting the relatively large size of its medical network.

Specialized talent development

Founded during the Qing Dynasty dating back to 1644, Tong Ren Tang's longstanding brand recognition in TCM brings inherent trust advantages to its various affiliates in the eyes of many Chinese. The brand's strength assists the company in attracting both patients and physician resources more easily than other emerging medical institutions trying to establish similar TCM healthcare networks.

The core competitiveness of TCM healthcare service providers lies in their physician resources. Tong Ren Tang Healthcare has enhanced its capabilities in that regard by recruiting senior TCM experts, developing specialty departments, and through equipment upgrades. Over 2,700 physicians practice at the company, forming the foundation for its healthcare service system. That's an important draw for long-term patients, who often look for treatment plans from a single doctor and don't just come for single consultations.

AI and digital transformation

Despite its historical reputation, Tong Ren Tang is embracing modernity with its deployment of AI and digital tools across both its production and user-facing segments. In manufacturing, the company is advancing intelligent TCM production in a collaboration with software firm Yonyou, which owns a BIP AIoT platform, aiming to improve its production efficiency, quality control, and supply chain coordination capabilities.

On the consumer side, the company has partnered with smart products maker Xiaomi to launch its "Tong Ren Tang Wellness Hall" an AI-enabled TCM health services intelligent agent. The system delivers personalized wellness recommendations through natural language interaction and integrates online pharmaceutical purchasing services, extending TCM knowledge into daily life scenarios.

Healthcare network expansion

Tong Ren Tang Healthcare has also been rapidly expanding its network of facilities and other resources in recent years through acquisitions. Notable examples include its acquisition of Sanxitang, another time-honored TCM brand based in Zhejiang province that operates clinics and also makes TCM products; and Zhonghetang, an outpatient healthcare center operator in Shanghai. Such purchases are allowing the company to quickly establish and expand its healthcare services in regions like the affluent Yangtze River Delta while simultaneously expanding its patient base.

Financially, the company's business has been growing steadily over the last three years, rising from 911 million yuan ($132 million) in 2022 to 1.18 billion yuan in 2024. It recorded revenue of about 858 million yuan in the first nine months of last year, up from 833 million yuan a year earlier. Its gross margin rose 1.1 percentage points year-on-year to 18.2% in the first nine months of last year.

TCM healthcare services are the company's primary revenue source. Revenue from that segment totaled 723 million yuan in the first nine months of 2025, accounting for about 84% of the total. Such services consist mostly of outpatient diagnosis, treatment and related services, with management services and health product sales providing supplementary revenue.

Healthcare network expansion requires sustained investment, which may be a factor behind the decision to list in Hong Kong.

Tong Ren Tang Healthcare has shown stabilizing growth rates lately, as the pace of its revenue increases decelerated from 26% in 2023 to about 3% in the first nine months of last year. The company's profit fell nearly 10% year-on-year to about 24 million yuan in the first nine months of last year, though that was mostly related to one-time gains from asset disposals that set a high base in the year-ago period.

The company is seeking new expansion initiatives to revive its momentum. It said it plans to acquire five medical institutions by the end of 2029, and to build an additional five new facilities, potentially in partnership with other companies, by that time to further expand its footprint.

From a broader perspective, demand for TCM healthcare services remains generally positive. Third-party data in the prospectus indicates that market was worth about 300 billion yuan in 2023 and is projected to expand to around 500 billion yuan by 2030, equating to about 7% annual growth over that time. Given the rapid expansion of China's older population and growing awareness of chronic diseases and how to manage them, demand for TCM diagnosis and treatment and health management services is expected to continue expanding.

Tong Ren Tang Healthcare should be well placed to tap into that demand, especially as it integrates acquired assets during its expansion phase and enhances its operational efficiency through efforts like greater use of AI. And, of course, there's always its name, which is a household word in China and is hugely influential. That asset alone, combined with its expansion and other initiatives, could be draws for investors looking for traditional industry alternatives in Hong Kong's current hot IPO market.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.