So-Young Reports Unaudited Third Quarter 2022 Financial Results

Rhea-AI Summary

So-Young International Inc. (SY) reported its Q3 2022 financial results, revealing total revenues of RMB323.3 million (US$45.5 million), a 25.1% decline year-over-year. The company recorded a net income of RMB2.3 million (US$0.3 million), down from RMB6.8 million in Q3 2021. The decrease in revenues was attributed to challenges posed by COVID-19. Despite a 28.1% year-over-year increase in paying medical service providers to 6,199, active monthly users dropped to 3.9 million from 8 million a year earlier. The board authorized a US$15 million share repurchase program to enhance shareholder value.

Positive

• Authorized a share repurchase program of up to US$15 million to boost shareholder value.
• Increased number of paying medical service providers by 28.1% year-over-year to 6,199.
• Narrowed operating loss by 82.5% quarter-over-quarter.

Negative

• Total revenues decreased by 25.1% year-over-year, down from RMB431.5 million.
• Net income dropped to RMB2.3 million from RMB6.8 million in Q3 2021.
• Average mobile MAUs fell to 3.9 million, down from 8 million a year ago.
• Reservation services revenues fell 51.8% year-over-year.

BEIJING, Nov. 18, 2022 /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 third quarter ended September 30, 2022.

Third Quarter 2022 Financial Highlights

• Total revenues were RMB323.3 million (US$45.5 million^[1]), compared to RMB431.5 million in the corresponding period of 2021, in line with our previous guidance.
  
  
• Net income attributable to So-Young International Inc. was RMB2.3 million (US$0.3 million), compared with net income attributable to So-Young International Inc. of RMB6.8 million in the same period of 2021.
• Non-GAAP net income attributable to So-Young International Inc.^[2] was RMB9.9 million (US$1.4 million), compared with non-GAAP net income attributable to So-Young International Inc. of RMB28.9 million in the same period of 2021.

Third Quarter 2022 Operational Highlights

• Average mobile MAUs were 3.9 million, compared with 8.0 million in the third quarter of 2021.
  
  
• Number of paying medical service providers on So-Young's platform was 6,199, an increase of 28.1% from 4,841 in the third quarter of 2021.
  
  
• Number of medical service providers subscribing to information services on So-Young's platform was 1,704, compared with 2,242 in the third quarter of 2021.
  
  
• Total number of purchasing users through reservation services was 136.7 thousand and the aggregate value of medical aesthetic treatment transactions facilitated by So-Young's platform was RMB363.7 million.

Recent Development

On November 18, 2022, the board of directors of the Company authorized a share repurchase program under which the Company is authorized to repurchase up to an aggregate value of US$15 million of its shares (including in the form of ADS) during the 12-month period beginning from November 18, 2022. 

The Company's proposed repurchases may be effected from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations. The Company's board of directors will review the share repurchase program periodically, and may authorize adjustment of its terms and size. The Company expects to fund the repurchases out of its cash balance. 

Mr. Xing Jin, Co-Founder and Chief Executive Officer of So-Young, commented, "In the third quarter, we were pleased to see encouraging signs from our business despite what remained a challenging operating environment  largely caused by COVID-19 outbreaks in many regions of China. Total revenues reached RMB323.3 million, an increase of 4.6% quarter over quarter, in line with our previous guidance. We continued to expand our cooperation with medical institutions by providing diversified services. The number of paying medical service providers on So-Young's platform increased 28.1% year-over-year to 6,199. Going forward, we are committed to having a healthy growth strategy and improving user service quality to reaffirm our leadership position."

Mr. Jin continued, "We narrowed our operating loss by 82.5% quarter-over-quarter and the non-GAAP net income attributable to the Company reached RMB9.9 million, benefiting from optimized cost structure, with sales and marketing  expenses decreasing by about 34.6% from a year ago. Looking ahead, with abundant cash on hand and a healthy cash reserve, we remain optimistic about the growth potential of the Chinese medical aesthetics industry and confident in our ability to overcome short-term difficulties and build the most trusted medical aesthetic services platform."

[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 RMB7.1135 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 September 30, 2022. [2] Non-GAAP net income attributable to So-Young International Inc. is defined as net income attributable to So-Young International Inc. excluding share-based compensation expenses. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

Third Quarter 2022 Financial Results     

Revenues

Total revenues were RMB323.3 million (US$45.5 million), a decrease of 25.1% from RMB431.5 million in the same period of 2021. The decrease was primarily due to a decrease in average revenue per paying medical service provider which was impacted by the resurgence of COVID-19 and remained under pressure from China's overall domestic consumer market.

• Information services and other revenues were RMB235.7 million (US$33.1 million), a decrease of 26.7% from RMB321.6 million in the same period of 2021. The decrease was primarily due to a decrease in the number of paying medical service providers subscribing to information services.
  
  
• Reservation services revenues were RMB29.7 million (US$4.2 million), a decrease of 51.8% from RMB61.7 million in the same period of 2021. The decrease was primarily due to the impact of the resurgence of COVID-19 in China and adoption of an operating strategy which gave higher subsidies to end users.
  
  
• Sales of equipment and maintenance services revenues were RMB57.8 million (US$8.1 million) and RMB48.1 million in the third quarter of 2022 and 2021, respectively, from Wuhan Miracle Laser Systems, Inc. ("Wuhan Miracle"). 

Cost of Revenues

Cost of revenues was RMB94.0 million (US$13.2 million), an increase of 4.9% from RMB89.6 million in the third quarter of 2021. The increase was primarily due to the consolidation of Wuhan Miracle. Cost of revenues included share-based compensation expenses of RMB2.0 million (US$0.3 million), compared with RMB4.8 million in the corresponding period of 2021.

Operating Expenses

Total operating expenses were RMB236.6 million (US$33.3 million), a decrease of 26.6% from RMB322.5 million in the third quarter of 2021.

• Sales and marketing expenses were RMB124.8 million (US$17.5 million), a decrease of 34.6% from RMB190.7 million in the third quarter of 2021. The decrease was primarily due to a decrease in expenses associated with branding and user acquisition activities. Sales and marketing expenses included share-based compensation expenses of RMB0.7 million (US$0.1 million), compared with RMB2.2 million in the corresponding period of 2021.
  
  
• General and administrative expenses were RMB59.8 million (US$8.4 million), an increase of 9.4% from RMB54.7 million in the third quarter of 2021. The increase was primarily due to an increase in payroll costs and professional services fees. General and administrative expenses included share-based compensation expenses of RMB4.5 million (US$0.6 million), compared with RMB10.0 million in the corresponding period of 2021.
  
  
• Research and development expenses were RMB52.0 million (US$7.3 million), a decrease of 32.6% from RMB77.1 million in the third quarter of 2021. The decrease was primarily attributable to a decrease in payroll costs. Research and development expenses included share-based compensation expenses of RMB0.4 million (US$0.1 million), compared with RMB5.1 million in the corresponding period of 2021.  

Income tax (expenses)/benefits

Income tax benefits were RMB16.5 million (US$2.3 million), compared with income tax expenses of RMB4.3 million in the same period of 2021. The increase in income tax benefits was primarily due to the refund of income tax of RMB12.6 million in the third quarter of 2022 based on the final 2021 tax return filing result.

Net income/(loss) attributable to So-Young International Inc.

Net income attributable to So-Young International Inc. was RMB2.3 million (US$0.3 million), compared with a net income attributable to So-Young International Inc. of RMB6.8 million in the third quarter of 2021.

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

Non-GAAP net income attributable to So-Young International Inc., which excludes the impact of share-based compensation expenses, was RMB9.9 million (US$1.4 million), compared with RMB28.9 million non-GAAP net income attributable to So-Young International Inc. in the same period of 2021.

Basic and Diluted Earnings/(loss) per ADS

Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB0.02 (US$0.00) and RMB0.02 (US$0.00), respectively, compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB0.06 and RMB0.06, respectively, in the same period of 2021.

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

As of September 30, 2022, cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments were RMB1,640.3 million (US$230.6 million), compared with RMB1,756.0 million as of December 31, 2021.

Business Outlook

For the fourth quarter of 2022, So-Young expects total revenues to be between RMB310 million (US$43.6 million) and RMB330 million (US$46.4 million), representing a 31.0% to 26.6% decrease from the same period in 2021. 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, particularly in view of the potential impact of the COVID-19, the effects of which are difficult to analyze and predict.

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 income/(loss) from operations and non-GAAP net income/(loss) attributable to So-Young International Inc. by excluding share-based compensation expenses from income/(loss) from operations and net income/(loss) 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. This is 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 Friday, November 18, 2022, at 7:00 AM U.S. Eastern Time (8:00 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

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, November 25, 2022. The dial-in details are:

International:   +1-412-317-0088

US:                  +1-877-344-7529

Passcode:         1723328

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 fourth 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: ir@soyoung.com 

Christensen

In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
E-mail: eric.yuan@christensencomms.com 

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: linda.bergkamp@christensencomms.com 

 

 

SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except for share and per share data)
	As of
	December 31,		September 30,		September 30,
	2021		2022		2022
	RMB		RMB		US$
Assets
Current assets:
Cash and cash equivalents	1,331,968		713,646		100,323
Restricted cash and term deposits	15,119		17,920		2,519
Trade receivables	54,829		42,299		5,946
Inventories, net	91,812		105,194		14,788
Receivables from online payment platforms	18,864		18,879		2,654
Amounts due from related parties	14,038		28,758		4,043
Term deposits and short-term investments	408,946		908,718		127,746
Prepayment and other current assets	91,842		147,877		20,788
Total current assets	2,027,418		1,983,291		278,807
Non-current assets:
Long-term investments	252,500		234,073		32,905
Intangible assets	193,955		175,594		24,685
Goodwill	540,693		540,693		76,009
Property and equipment, net	124,576		115,321		16,212
Deferred tax assets	47,520		53,828		7,567
Operating lease right-of-use assets	95,609		71,533		10,056
Other non-current assets	48,097		142,756		20,068
Total non-current assets	1,302,950		1,333,798		187,502
Total assets	3,330,368		3,317,089		466,309
Liabilities
Current liabilities:
Taxes payable	48,571		63,826		8,973
Contract liabilities	139,155		134,271		18,876
Salary and welfare payables	103,624		87,214		12,260
Amounts due to related parties	681		185		26
Accrued expenses and other current liabilities	376,841		351,476		49,410
Operating lease liabilities-current	43,529		49,831		7,005
Total current liabilities	712,401		686,803		96,550
Non-current liabilities:
Operating lease liabilities-non current	62,356		32,685		4,595
Deferred tax liabilities	38,577		33,145		4,659
Total non-current liabilities	100,933		65,830		9,254
Total liabilities	813,334		752,633		105,804

 

SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Amounts in thousands, except for share and per share data)
Shareholders' equity:
Treasury stock	(217,712)		(217,712)		(30,605)
Class A Ordinary shares (US$ 0.0005 par value;      750,000,000 shares authorized as of December 31, 2021     and September 30, 2022;  71,736,059 and 69,092,367     shares issued and outstanding as of December 31, 2021,     72,128,429 and 69,484,737 shares issued and outstanding     as of September 30, 2022, respectively)	230		232		32
Class B Ordinary shares (US$ 0.0005 par value; 20,000,000    shares authorized as of December 31, 2021 and September    30, 2022; 12,000,000 shares issued and outstanding as of    December 31, 2021 and September 30, 2022)	37		37		5
Additional paid-in capital	2,999,562		3,035,807		426,767
Statutory reserves	20,331		20,587		2,894
Accumulated deficit	(272,368)		(369,451)		(51,937)
Accumulated other comprehensive (loss)/income	(83,891)		24,495		3,443
Total So-Young International Inc. shareholders' equity	2,446,189		2,493,995		350,599
Non-controlling interests	70,845		70,461		9,906
Total shareholders' equity	2,517,034		2,564,456		360,505
Total liabilities and shareholders' equity	3,330,368		3,317,089		466,309

 

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 Nine Months Ended
	September  30, 2021		September 30, 2022		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2022
	RMB		RMB		US$		RMB		RMB		US$
Revenues
Information services and others	321,593		235,723		33,138		960,140		654,597		92,021
Reservation services	61,737		29,733		4,180		234,680		102,702		14,438
Sales of equipment and maintenance services	48,120		57,847		8,132		48,120		175,429		24,662
Total revenues	431,450		323,303		45,450		1,242,940		932,728		131,121
Cost of revenues	(89,638)		(94,028)		(13,218)		(200,799)		(305,090)		(42,889)
Gross profit	341,812		229,275		32,232		1,042,141		627,638		88,232
Operating expenses:
Sales and marketing expenses	(190,740)		(124,781)		(17,541)		(639,828)		(373,734)		(52,541)
General and administrative expenses	(54,691)		(59,847)		(8,413)		(166,362)		(187,033)		(26,293)
Research and development expenses	(77,113)		(51,998)		(7,310)		(219,048)		(194,021)		(27,274)
Total operating expenses	(322,544)		(236,626)		(33,264)		(1,025,238)		(754,788)		(106,108)
Income/(loss) from operations	19,268		(7,351)		(1,032)		16,903		(127,150)		(17,876)
Other income/(expenses):
Investment income	2,272		493		69		8,004		3,997		562
Interest income	4,903		10,061		1,414		15,674		18,607		2,616
Exchange (losses)/gains	(446)		24		3		(4,799)		(515)		(72)
Impairment of long-term investment	(17,850)		(7,945)		(1,117)		(17,850)		(7,945)		(1,117)
Share of losses of equity method investee	(909)		(9,106)		(1,280)		(776)		(11,008)		(1,547)
Others, net	2,932		(781)		(110)		9,836		7,600		1,068
Income/(loss) before tax	10,170		(14,605)		(2,053)		26,992		(116,414)		(16,366)
Income tax (expenses)/benefits	(4,298)		16,486		2,318		(11,086)		18,542		2,607
Net income/(loss)	5,872		1,881		265		15,906		(97,872)		(13,759)
Net loss attributable to noncontrolling interests	896		429		60		3,459		1,045		147
Net income/(loss) attributable to So-Young International Inc.	6,768		2,310		325		19,365		(96,827)		(13,612)

 

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 Nine Months Ended
	September 30, 2021		September 30, 2022		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2022
	RMB		RMB		US$		RMB		RMB		US$
Net earnings/(loss) per ordinary share
Net earnings/(loss) per ordinary share attributable to ordinary shareholder - basic	0.08		0.03		0.00		0.24		(1.17)		(0.16)
Net earnings/(loss) per ordinary share attributable to ordinary shareholder -     diluted	0.08		0.03		0.00		0.23		(1.17)		(0.16)
Net earnings/(loss) per ADS attributable to ordinary shareholders - basic (13     ADS represents 10 Class A ordinary shares)	0.06		0.02		0.00		0.18		(0.90)		(0.12)
Net earnings/(loss) per ADS attributable to ordinary shareholders - diluted (13     ADS represents 10 Class A ordinary shares)	0.06		0.02		0.00		0.18		(0.90)		(0.12)
Weighted average number of ordinary shares used in computing earnings/(loss)     per share, basic*	80,895,891		82,946,796		82,946,796		81,805,945		82,578,596		82,578,596
Weighted average number of ordinary shares used in computing earnings/(loss)     per share, diluted*	81,471,931		83,027,281		83,027,281		82,954,414		82,578,596		82,578,596
Share-based compensation expenses included in:
Cost of revenues	(4,814)		(2,007)		(282)		(12,938)		(7,303)		(1,027)
Sales and marketing expenses	(2,245)		(670)		(94)		(6,089)		(6,342)		(892)
General and administrative expenses	(10,032)		(4,521)		(636)		(24,446)		(14,684)		(2,064)
Research and development expenses	(5,083)		(428)		(60)		(13,763)		(7,498)		(1,054)
*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 Nine Months Ended
	September 30, 2021		September 30, 2022		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2022
	RMB		RMB		US$		RMB		RMB		US$
GAAP income/(loss) from operations	19,268		(7,351)		(1,032)		16,903		(127,150)		(17,876)
Add back: Share-based compensation expenses	22,174		7,626		1,072		57,236		35,827		5,037
Non-GAAP income/(loss) from operations	41,442		275		40		74,139		(91,323)		(12,839)
GAAP net income/(loss) attributable to So-Young International Inc.	6,768		2,310		325		19,365		(96,827)		(13,612)
Add back: Share-based compensation expenses	22,174		7,626		1,072		57,236		35,827		5,037
Non-GAAP net income/(loss) attributable to So-Young International Inc.	28,942		9,936		1,397		76,601		(61,000)		(8,575)

 

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SOURCE So-Young International Inc.

FAQ

What were So-Young's total revenues for Q3 2022?

So-Young reported total revenues of RMB323.3 million (US$45.5 million) for Q3 2022.

How much did So-Young's net income decrease in Q3 2022?

Net income attributable to So-Young decreased to RMB2.3 million in Q3 2022 from RMB6.8 million in Q3 2021.

What is the outlook for So-Young's Q4 2022 revenue?

So-Young expects Q4 2022 total revenues to be between RMB310 million and RMB330 million, representing a 31.0% to 26.6% decrease from the same period in 2021.

What is the number of paying medical service providers on So-Young's platform?

So-Young had 6,199 paying medical service providers on its platform as of Q3 2022.

What new program did So-Young's board authorize?

The board authorized a share repurchase program of up to US$15 million starting November 18, 2022.