So-Young Reports Unaudited Second Quarter 2023 Financial Results

BEIJING, Aug. 21, 2023 /PRNewswire/ — So-Young International Inc. (Nasdaq: SY) (“So-Young” or the “Company”), the largest and most vibrant social community in China for consumers, professionals and service providers in the medical aesthetics industry, today announced its unaudited financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Financial Highlights

Total revenues were RMB412.1 million (US$56.8 million[1]), an increase of 33.3% from RMB309.1 million in the same period of 2022, exceeding the high end of guidance.

Net loss attributable to So-Young was RMB2.6 million (US$0.4 million), compared with net loss attributable to So-Young of RMB32.3 million in the second quarter of 2022.

Non-GAAP net income attributable to So-Young[2] was RMB15.5 million (US$2.1 million), compared with non-GAAP net loss attributable to So-Young of RMB22.7 million in the same period of 2022.

Second Quarter 2023 Operational Highlights

Average mobile MAUs were 3.0 million, compared with 3.5 million in the second quarter of 2022.

Number of medical service providers subscribing to information services on So-Young’s platform were 1,659, compared with 2,622 in the second quarter of 2022.

Total number of users purchasing were 161.0 thousand while the aggregate value of medical aesthetic treatment transactions facilitated by So-Young’s platform was RMB493.9 million.

Mr. Xing Jin, Co-Founder and Chief Executive Officer of So-Young, commented, “In the second quarter, we continued to achieve growth momentum with total revenues exceeding the upper range of our guidance, increasing 33.3% year-over-year to RMB412.1 million. This also set a new quarterly record high in revenue since the beginning of 2022, highlighting the success we have had in adapting and retooling ourselves with existing community e-commerce POP business growth and the development of new revenue streams along the industry value chain. Looking at our progress from this perspective, I believe our growth trajectory is only just beginning. As we drive our strategic transformation in the second half of 2023, we believe So-Young is well positioned to serve the interests of more users, professionals, and industry partners, underpinning our sustainable business development.”

Mr. Hui Zhao, Chief Financial Officer of So-Young, added, “Profitability improved significantly during the quarter. On a non-GAAP basis, we were profitable with net income of RMB15.5 million, compared to a loss of RMB22.7 million in the same period last year. Our existing POP businesses continue to see the pace of recovery pick up pace which puts us in a position to confidently allocate resources towards new high-quality growth ventures such as So-Young Prime and our supply chain business. We strongly believe these new ventures reflect the future of the industry and the tremendous opportunities its long-term growth with create. Our focus for the remainder of the year will be on accelerating our pursuit of new high-quality growth, refining operational strategies, enhancing customer acquisition channels, carefully managing costs, and consistently improving our financial performance.”

[1] This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the reader. Unless otherwise specified, all translations of Renminbi amounts into U.S. dollar amounts in this press release are made at RMB7.2513 to US$1.00, which was the U.S. dollars middle rate announced by the Board of Governors of the Federal Reserve System of the United States on June 30, 2023.

[2] Non-GAAP net income/(loss) attributable to So-Young is defined as net income/(loss) attributable to So-Young International Inc. excluding share-based compensation expenses attributable to So-Young International Inc. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.

Second Quarter 2023 Financial Results

Revenues

Total revenues were RMB412.1 million (US$56.8 million), an increase of 33.3% from RMB309.1 million in the same period of 2022. The increase was primarily due to the increase in average revenue per paying medical service provider and other revenues generated by So-Young Prime.

Information services and other revenues were RMB298.9 million (US$41.2 million), an increase of 40.2% from RMB213.1 million in the same period of 2022. The increase was primarily due to an increase in average revenue per paying medical service provider and other revenues generated by So-Young Prime.

Reservation services revenues were RMB26.9 million (US$3.7 million), a decrease of 12.1% from RMB30.6 million in the same period of 2022. The decrease was primarily due to the operating strategy which gave higher subsidies to end users.

Sales of medical products and maintenance services[3] revenues were RMB86.3 million (US$11.9 million), an increase of 32.0% from RMB65.4 million in the same period of 2022, primarily due to an increase in sales of both equipment and injectable drugs.

Cost of Revenues[4]

Cost of revenues were RMB150.4 million (US$20.7 million), an increase of 43.9% from RMB104.5 million in the second quarter of 2022. The increase was primarily due to an increase in costs associated with So-Young Prime and Wuhan Miracle. Cost of revenues included share-based compensation expenses of RMB0.4 million (US$0.1 million) during the second quarter of 2023, compared with RMB2.7 million in the corresponding period of 2022.

Cost of services and others were RMB106.5 million (US$14.7 million), an increase of 54.4% from RMB69.0 million in the second quarter of 2022. The increase was primarily due to an increase in costs associated with So-Young Prime. Cost of services and others included share-based compensation expenses of RMB0.4 million (US$0.1 million) during the second quarter of 2023, compared with RMB2.7 million in the corresponding period of 2022.

Cost of medical products sold and maintenance services were RMB43.9 million (US$6.0 million), an increase of 23.6% from RMB35.5 million in the second quarter of 2022. The increase was primarily due to an increase in costs associated with Wuhan Miracle.  

 

[3] In the first half of 2023, in light of the better monitoring business development of upstream supply chain, the Company grouped the revenue generated from sales of injectable drugs and sales of equipment and maintenance services into one line item, which is renamed as sales of medical products and maintenance services.

The sale of injectable drugs was previously reported in line item of information services and others. The information services and others for prior periods and the first half of 2022 have also been retrospectively updated. The amount reclassified from information services and others to sales of medical products and maintenance services are RMB9.0 million for the second quarter of 2023, RMB6.2 million for the second quarter of 2022, RMB16.6 million for the first six months of 2023, and RMB10.7 million for the first six months of 2022.

[4] In the first half of 2023, the previous line item cost of revenues was separated into two line items, which are cost of medical products sold and maintenance services and cost of services and others. Cost of medical products sold and maintenance services primarily consists of expenditures relating to medical products and maintenance services, and the remaining cost of revenues is reclassified into cost of services and others. The cost of medical products sold and maintenance services and cost of services and others for prior periods and the first half of 2022 have also been retrospectively reclassified. 

Operating Expenses

Total operating expenses were RMB282.4 million (US$38.9 million), an increase of 14.5% from RMB246.6 million in the second quarter of 2022.

Sales and marketing expenses were RMB137.9 million (US$19.0 million), an increase of 13.3% from RMB121.7 million in the second quarter of 2022. The increase was primarily due to an increase in expenses associated with branding and user acquisition activities. Sales and marketing expenses for the second quarter of 2023 included share-based compensation expenses of RMB0.8 million (US$0.1 million), compared with RMB2.2 million in the corresponding period of 2022.

General and administrative expenses were RMB92.3 million (US$12.7 million), an increase of 49.4% from RMB61.8 million in the second quarter of 2022. The increase was due to an increase in payroll costs associated with the expansion of administrative employees to support our business upgrade and new strategic businesses. General and administrative expenses for the second quarter of 2023 included share-based compensation expenses of RMB15.5 million (US$2.1 million), compared with RMB2.2 million in the corresponding period of 2022.

Research and development expenses were RMB52.1 million (US$7.2 million), a decrease of 17.4% from RMB63.1 million in the second quarter of 2022. The decrease was primarily attributable to improvements in staff efficiency. Research and development expenses for the second quarter of 2023 included share-based compensation expenses of RMB1.3 million (US$0.2 million), compared with RMB2.5 million in the corresponding period of 2022.

Income Tax Benefits

Income tax benefits were RMB0.8 million (US$0.1 million), compared with income tax benefits RMB0.1 million in the same period of 2022.

Net Loss Attributable to So-Young International Inc.

Net loss attributable to So-Young International Inc. was RMB2.6 million (US$0.4 million), compared with a net loss attributable to So-Young International Inc. of RMB32.3 million in the second quarter of 2022.

Non-GAAP Net Income/(Loss) Attributable to So-Young International Inc.

Non-GAAP net income attributable to So-Young International Inc. was RMB15.5 million (US$2.1 million), compared with RMB22.7 million non-GAAP net loss attributable to So-Young International Inc. in the same period of 2022.

Basic and Diluted Loss per ADS

Basic and diluted loss per ADS attributable to ordinary shareholders were RMB0.02 (US$0.00) and RMB0.02 (US$0.00), respectively, compared with basic and diluted loss per ADS attributable to ordinary shareholders of RMB0.30 and RMB0.30, respectively, in the same period of 2022.

Cash and Cash Equivalents, Restricted Cash and Term Deposits, Term Deposits and Short-Term Investments

As of June 30, 2023, cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments were RMB1,536.5 million (US$211.9 million), compared with RMB1,585.3 million as of December 31, 2022. 

Business Outlook

For the third quarter of 2023, So-Young expects total revenues to be between RMB380.0 million (US$52.4 million) and RMB400.0 million (US$55.2 million), representing a 17.5% to 23.7% increase from the same period in 2022. The above outlook is based on the current market conditions and reflects the Company’s preliminary estimates of market and operating conditions, as well as customer demand, which are all subject to change.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP (loss)/income from operations and non-GAAP net (loss)/income attributable to So-Young International Inc. by excluding share-based compensation expenses from (loss)/income from operations and net (loss)/income attributable to So-Young International Inc., respectively. The Company believes these non-GAAP financial measures are important to help investors understand the Company’s operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess the Company’s core operating results, as they exclude certain expenses that are not expected to result in cash payments. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation expenses have been and will continue to be incurred in the future. All these are not reflected in the presentation of the non-GAAP financial measures, but should be considered in the overall evaluation of the Company’s results. The Company compensates for these limitations by providing the relevant disclosure of its share-based compensation expenses in the reconciliations to the most directly comparable GAAP financial measures, which should be considered when evaluating the Company’s performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.

Conference Call Information

So-Young’s management will hold an earnings conference call on Monday, August 21, 2023, at 7:30 AM U.S. Eastern Time (7:30 PM on the same day, Beijing/Hong Kong Time). Dial-in details for the earnings conference call are as follows:

International:       

+1-412-902-4272

Mainland China:   

4001-201203

US:         

+1-888-346-8982

Hong Kong:     

+852-301-84992

Passcode:         

So-Young International Inc.

A telephone replay will be available two hours after the conclusion of the conference call through 23:59 U.S. Eastern Time, August 28, 2023. The dial-in details are:

International:       

+1-412-317-0088

US:         

+1-877-344-7529

Passcode:         

2864127

Additionally, a live and archived webcast of this conference call will be available at http://ir.soyoung.com.

About So-Young International Inc.

So-Young International Inc. (Nasdaq: SY) (“So-Young” or the “Company”) is the largest and most vibrant social community in China for consumers, professionals and service providers in the medical aesthetics industry. The Company presents users with reliable information through offering high quality and trustworthy content together with a multitude of social functions on its platform, as well as by curating medical aesthetic service providers that are carefully selected and vetted. Leveraging So-Young’s strong brand image, extensive audience reach, trust from its users, highly engaging social community and data insights, the Company is well-positioned to expand both along the medical aesthetic industry value chain and into the massive, fast-growing consumption healthcare service market.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the Financial Guidance and quotations from management in this announcement, as well as So-Young’s strategic and operational plans, contain forward-looking statements. So-Young may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about So-Young’s beliefs and expectations, are forward-looking statements. Forward looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: So-Young’s strategies; So-Young’s future business development, financial condition and results of operations; So-Young’s ability to retain and increase the number of users and medical service providers, and expand its service offerings; competition in the online medical aesthetic service industry; changes in So-Young’s revenues, costs or expenditures; Chinese governmental policies and regulations relating to the online medical aesthetic service industry, general economic and business conditions globally and in China; the impact of the COVID-19 pandemic to So-Young’s business operations and the economy in China and elsewhere generally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and So-Young undertakes no duty to update such information, except as required under applicable law.

For more information, please contact:

So-Young

Investor Relations
Ms. Vivian Xu
Phone: +86-10-8790-2012
E-mail: [email protected] 

Christensen

In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
E-mail: [email protected] 

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: [email protected] 

 

 

SO-YOUNG INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except for share and per share data)

As of

December 31,

June 30,

June 30,

2022

2023

2023

RMB

RMB

US$

Assets

Current assets:

Cash and cash equivalents

694,420

758,711

104,631

Restricted cash and term deposits

14,908

15,272

2,106

Trade receivables

36,006

55,394

7,639

Inventories, net

120,480

123,020

16,965

Receivables from online payment platforms

14,787

18,442

2,543

Amounts due from related parties

33,382

21,426

2,955

Term deposits and short-term investments

875,955

762,516

105,156

Prepayment and other current assets

126,889

152,636

21,049

Total current assets

1,916,827

1,907,417

263,044

Non-current assets:

Long-term investments

227,959

251,709

34,712

Intangible assets

169,280

156,821

21,627

Goodwill

540,693

540,693

74,565

Property and equipment, net

116,184

115,318

15,903

Deferred tax assets

64,739

64,059

8,834

Operating lease right-of-use assets

62,898

48,092

6,632

Other non-current assets

99,293

79,942

11,025

Total non-current assets

1,281,046

1,256,634

173,298

Total assets

3,197,873

3,164,051

436,342

Liabilities

Current liabilities:

Taxes payable

74,580

60,108

8,289

Contract liabilities

110,159

106,933

14,747

Salary and welfare payables

72,532

72,850

10,046

Amounts due to related parties

5,895

413

57

Accrued expenses and other current liabilities

224,589

303,449

41,848

Operating lease liabilities-current

50,285

45,224

6,237

Total current liabilities

538,040

588,977

81,224

Non-current liabilities:

Operating lease liabilities-non current

20,972

6,674

920

Deferred tax liabilities

30,993

27,540

3,798

Other non-current liabilities

1,021

141

Total non-current liabilities

51,965

35,235

4,859

Total liabilities

590,005

624,212

86,083

 

SO-YOUNG INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except for share and per share data)

Shareholders’ equity

Treasury stock

(232,835)

(351,639)

(48,493)

Class A Ordinary shares (US$0.0005 par value; 750,000,000
     shares authorized as of December 31, 2022 and June 30,
     2023; 73,065,987 and 68,843,320 shares issued and
     outstanding as of December 31, 2022, 73,364,515 and
     63,772,201 shares issued and outstanding as of June 30,
     2023, respectively)

236

237

32

Class B Ordinary shares (US$0.0005 par value; 20,000,000
     shares authorized as of December 31, 2022 and June 30,
     2023; 12,000,000 shares issued and outstanding as of
     December 31, 2022 and June 30, 2023)

37

37

5

Additional paid-in capital

3,043,971

3,071,370

423,561

Statutory reserves

29,027

29,027

4,003

Accumulated deficit

(346,618)

(361,144)

(49,804)

Accumulated other comprehensive income

4,107

37,328

5,148

Total So-Young International Inc. shareholders’ equity

2,497,925

2,425,216

334,452

Non-controlling interests

109,943

114,623

15,807

Total shareholders’ equity

2,607,868

2,539,839

350,259

Total liabilities and shareholders’ equity

3,197,873

3,164,051

436,342

 

SO-YOUNG INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except for share and per share data)

For the Three Months Ended

For the Six Months Ended

June 30, 2022

June 30, 2023

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2023

RMB

RMB

US$

RMB

RMB

US$

Revenues:

Information services and others

213,111

298,879

41,217

408,145

509,163

70,217

Reservation services

30,616

26,903

3,710

72,969

56,584

7,803

Sales of medical products and maintenance services

65,352

86,284

11,899

128,311

156,422

21,571

Total revenues

309,079

412,066

56,826

609,425

722,169

99,591

Cost of revenues:

Cost of services and others

(68,989)

(106,519)

(14,690)

(139,923)

(188,019)

(25,929)

Cost of medical products sold and maintenance services

(35,490)

(43,859)

(6,048)

(71,139)

(76,080)

(10,492)

Total cost of revenues

(104,479)

(150,378)

(20,738)

(211,062)

(264,099)

(36,421)

Gross profit

204,600

261,688

36,088

398,363

458,070

63,170

Operating expenses:

Sales and marketing expenses

(121,740)

(137,921)

(19,020)

(248,953)

(250,432)

(34,537)

General and administrative expenses

(61,794)

(92,341)

(12,734)

(127,186)

(153,855)

(21,218)

Research and development expenses

(63,089)

(52,141)

(7,191)

(142,023)

(107,934)

(14,885)

Total operating expenses

(246,623)

(282,403)

(38,945)

(518,162)

(512,221)

(70,640)

Loss from operations

(42,023)

(20,715)

(2,857)

(119,799)

(54,151)

(7,470)

Other income/(expenses):

Investment income

1,068

3,370

465

3,504

10,222

1,410

Interest income

5,347

13,966

1,926

8,546

25,893

3,571

Exchange losses

(600)

(1,579)

(218)

(539)

(1,154)

(159)

Share of losses of equity method investee

(833)

(3,699)

(510)

(1,902)

(6,870)

(947)

Others, net

4,425

6,562

905

8,381

8,587

1,184

Loss before tax

(32,616)

(2,095)

(289)

(101,809)

(17,473)

(2,411)

Income tax benefits

55

785

108

2,056

5,049

696

Net loss

(32,561)

(1,310)

(181)

(99,753)

(12,424)

(1,715)

Net loss/(income) attributable to noncontrolling interests

265

(1,268)

(175)

616

(2,102)

(290)

Net loss attributable to So-Young International Inc.

(32,296)

(2,578)

(356)

(99,137)

(14,526)

(2,005)

 

SO-YOUNG INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(Amounts in thousands, except for share and per share data)

For the Three Months Ended

For the Six Months Ended

June 30, 2022

June 30, 2023

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2023

RMB

RMB

US$

RMB

RMB

US$

Net loss per ordinary share

Net loss per ordinary share attributable to ordinary shareholder – basic

(0.39)

(0.03)

(0.00)

(1.20)

(0.18)

(0.02)

Net loss per ordinary share attributable to ordinary shareholder – diluted

(0.39)

(0.03)

(0.00)

(1.20)

(0.18)

(0.02)

Net loss per ADS attributable to ordinary shareholders – basic (13 ADS
     represents 10 Class A ordinary shares)

(0.30)

(0.02)

(0.00)

(0.92)

(0.14)

(0.02)

Net loss per ADS attributable to ordinary shareholders – diluted (13 ADS
     represents 10 Class A ordinary shares)

(0.30)

(0.02)

(0.00)

(0.92)

(0.14)

(0.02)

Weighted average number of ordinary shares used in computing
     earnings/(loss) per share,
basic*

82,709,017

77,310,426

77,310,426

82,394,496

78,580,369

78,580,369

Weighted average number of ordinary shares used in computing   
   earnings/(loss) per share, diluted*

82,709,017

77,310,426

77,310,426

82,394,496

78,580,369

78,580,369

Share-based compensation expenses included in:

Cost of services and others

(2,662)

(412)

(57)

(5,296)

(1,217)

(168)

Sales and marketing expenses

(2,236)

(823)

(113)

(5,672)

(2,317)

(320)

General and administrative expenses

(2,249)

(15,546)

(2,144)

(10,163)

(21,564)

(2,974)

Research and development expenses

(2,478)

(1,305)

(180)

(7,070)

(2,182)

(301)

*   Both Class A and Class B ordinary shares are included in the calculation of the weighted average number of ordinary shares outstanding, basic and diluted.

 

SO-YOUNG INTERNATIONAL INC.

Reconciliation of GAAP and Non-GAAP Results

(Amounts in thousands, except for share and per share data)

For the Three Months Ended

For the Six Months Ended

June 30,

2022

June 30,

2023

June 30,
2023

June 30,
2022

June 30,
2023

June 30,
2023

RMB

RMB

US$

RMB

RMB

US$

GAAP loss from operations

(42,023)

(20,715)

(2,857)

(119,799)

(54,151)

(7,470)

Add back: Share-based compensation expenses

9,625

18,086

2,494

28,201

27,280

3,763

Non-GAAP loss from operations

(32,398)

(2,629)

(363)

(91,598)

(26,871)

(3,707)

GAAP net loss attributable to So-Young International Inc.

(32,296)

(2,578)

(356)

(99,137)

(14,526)

(2,005)

Add back: Share-based compensation expenses

9,625

18,086

2,494

28,201

27,280

3,763

Non-GAAP net (loss)/income attributable to So-Young International Inc.

(22,671)

15,508

2,138

(70,936)

12,754

1,758

 

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