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So-Young Reports Third Quarter 2020 Unaudited Financial Results

/EIN News/ -- BEIJING, Nov. 25, 2020 (GLOBE NEWSWIRE) -- 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 three months ended September 30, 2020.

Third Quarter 2020 Financial Highlights

  • Total revenues were RMB359.6 million (US$53.0 million1), an increase of 18.9% from RMB302.4 million in the same period of 2019, in line with our previous guidance.

  • Net income was RMB0.9 million (US$0.1 million), compared with a net income RMB31.6 million in the same period of 2019.

  • Non-GAAP net income2 was RMB26.4 million (US$3.9 million), compared with a non-GAAP net income of RMB40.5 million in the same period of 2019.

Third Quarter 2020 Operational Highlights

  • Average mobile MAUs were 8.7 million, an increase of 153.7% from 3.4 million in the third quarter of 2019.

  • Total number of users purchasing reservation service were 251,928 and the aggregate value of medical aesthetic treatment transactions facilitated by So-Young’s platform was RMB1,110.1 million.

  • Number of paying medical service providers on So-Young’s platform were 4,096, an increase of 26.8% from 3,230 in the third quarter of 2019.

Mr. Xing Jin, Co-Founder and Chief Executive Officer of So-Young, commented, “We are pleased to report solid results for the third quarter, as the pandemic situation became more effectively controlled in China and the medical aesthetics and wellness industry is recovering. We also made significant progress in expanding our vibrant community of users and medical aesthetic professionals, where our strategy for engagement was simple: improve users’ trust in our platform and try to facilitate rational decision-making by providing reliable doctors, multi-layer content, and supportive medical treatment plans. Our efforts yielded results and during the quarter, mobile MAUs increased to 8.7 million, up 153.7% year over year, while the number of paying medical service providers on our platform increased to 4,096, up 26.8% year-over-year.”

Mr. Jin added, “During the quarter, one of our main initiatives for driving user growth and engagement was the release of our second version of the Emerald Doctor lists. This feature is becoming a standard of quality in the medical aesthetics industry. Monthly visits to the homepages of listed doctors were up 40%. In addition, we’re addressing user education and building a content ecosystem through our So-Young Ambassadors program that generated nearly 8,500 premium articles since launch, with 481,000 sign-ups. We also reinforced our reputation as the first choice of both users and medical professionals among medical aesthetics platforms, especially for non-surgical treatments. To do this, we focused on improving performance in customer service and the overall user experience. We believe we have the right strategy to maintain our leadership, through the excellence of our management, strategy, and innovative approach.” 

Mr. Min Yu, Chief Financial Officer of So-Young, also commented, “We are closely monitoring the recovery of the industry and consumer sentiment across our core target market and are pleased with our results during the third quarter as we position the Company to capitalize on the eventual post-pandemic recovery. We will continue to focus on streamlining resources to drive engagement, platform stickiness and traffic growth while generating real value-added support for medical professionals and merchants. We believe that focused investments in elevating the So-Young brand and making our ecosystem synonymous with trust and high-quality user experiences is critical for creating sustainable long-term growth.”

Third Quarter 2020 Financial Results

Revenues

Total revenues were RMB359.6 million (US$53.0 million), an increase of 18.9% from RMB302.4 million in the same period of 2019. The increase was primarily due to increases in number of paying medical service providers which gradually recovered operation after the COVID-19 pandemic becomes better controlled in China.

  • Information services revenues were RMB265.7 million (US$39.1 million), an increase of 23.9% from RMB214.3 million in the same period of 2019. The increase was mainly due to increases in average revenue per paying medical service provider. Total number of paying medical service providers subscribing to information services on So-Young’s platform were 2,146.
     
  • Reservation services revenues were RMB93.9 million (US$13.8 million), an increase of 6.6% from RMB88.1 million in the same period of 2019. The increase was primarily due to an increase in the number of purchasing users. 

Costs of Revenues

Costs of revenues were RMB54.7 million (US$8.1 million), an increase of 1.6% from RMB53.9 million in the third quarter of 2019. Cost of revenues included share-based compensation expenses of RMB5.1 million (US$0.8 million) during the third quarter of 2020, compared with RMB1.6 million in the corresponding period of 2019.

Operating Expenses

Total operating expenses were RMB335.1 million (US$49.4 million), an increase of 46.6% from RMB228.5 million in the third quarter of 2019.

  • Sales and marketing expenses were RMB221.6 million (US$32.6 million), an increase of 41.5% from RMB156.6 million in the third quarter of 2019. The increase was primarily due to an increase in expenses associated with branding and user acquisition initiatives and payroll costs due to increased number of employees in the business development team. Sales and marketing expenses for the third quarter of 2020 included share-based compensation expenses of RMB2.2 million (US$0.3 million), compared with RMB1.1 million in the corresponding period of 2019.
     
  • General and administrative expenses were RMB50.3 million (US$7.4 million), an increase of 55.4% from RMB32.4 million in the third quarter of 2019. The increase was primarily due to an increase in payroll costs associated with the expansion of administrative employees. General and administrative expenses for the third quarter of 2020 included share-based compensation expenses of RMB12.2 million (US$1.8 million), compared with RMB6.4 million in the corresponding period of 2019.
     
  • Research and development expenses were RMB63.2 million (US$9.3 million), an increase of 59.7% from RMB39.5 million in the third quarter of 2019. The increase was primarily attributable to an increase in payroll costs. Research and development expenses for the third quarter of 2020 included share-based compensation expenses of RMB6.0 million (US$0.9 million).  

Income Tax (Expenses)/Benefit

Income tax benefit was RMB16.3 million (US$2.4 million), compared with a RMB2.9 million income tax expenses in the same period of 2019. The income tax benefit was derived from a change in the preferential income tax rate of one of So-Young's subsidiaries which resulted in a refund of RMB16.4 million (US$2.4 million) for tax paid in previous periods.

Net income

Net income was RMB0.9 million (US$0.1 million), compared with a net income RMB31.6 million in the third quarter of 2019.

Non-GAAP net income

Non-GAAP net income, which excludes the impact of share-based compensation expenses was RMB26.4 million (US$3.9 million), compared with RMB40.5 million non-GAAP net income in the same period of 2019.

Basic and Diluted Earnings per ADS

Basic and diluted income per ADS attributable to ordinary shareholders were RMB0.01 (US$0.0015) and RMB0.01 (US$0.0015), compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB0.31 and RMB0.29 in the same period of 2019.

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

As of September 30, 2020, cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments were RMB2,809.7 million (US$413.8 million), compared with RMB2,844.0 million as of December 31, 2019.

Business Outlook

For the fourth quarter of 2020, So-Young expects total revenues to be between RMB420 million (US$61.9 million) and RMB450 million (US$66.3 million), representing a 17.3% to 25.6% increase from the same period in 2019. The above outlook is based on the current market conditions and reflects the Company’s preliminary estimates of market and operating conditions, and customer demand, particularly in view of the potential continuing impact of the COVID-19, the effects of which are difficult to analyze and predict, 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 income from operations and non-GAAP net income by excluding share-based compensation expenses from income from operations and net income, 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 and 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 Wednesday, November 25, 2020, at 7:00 AM U.S. Eastern Time (8:00 PM on the same day, Beijing/Hong Kong Time). Participants can register for the conference call by navigating to https://apac.directeventreg.com/registration/event/2689544.

Once preregistration has been completed, participants will receive dial-in numbers, an event passcode, and a unique registrant ID.

To join the conference, please dial the number you receive, enter the event passcode followed by your unique registrant ID, and you will be joined to the conference instantly.

A telephone replay will be available two hours after the conclusion of the conference call through 7:59 AM U.S. Eastern Time, December 3, 2020. The dial-in details are:

International:       +61-2-8199-0299
US: +1-646-254-3697
Passcode: 2689544

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: ir@soyoung.com

Christensen

In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
E-mail: Eyuan@christensenir.com

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@christensenir.com

____________________________

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 RMB6.7896 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, 2020.

2 Non-GAAP net income is defined as net income excluding share-based compensation expenses. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.


SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except for share and per share data)

  As of
  December 31,
2019
  September 30,
2020
  September 30,
2020
  RMB   RMB   US$
Assets          
Current assets:          
Cash and cash equivalents 884,676     552,153     81,323  
Restricted cash and term deposits 16,509     25,176     3,709  
Trade receivables 26,110     46,110     6,791  
Receivables from online payment platforms 13,429     15,416     2,271  
Amounts due from related parties 5,815     8,186     1,206  
Term deposits and short-term investments 1,942,860     2,232,412     328,799  
Prepayment and other current assets 67,628     51,427     7,574  
Total current assets 2,957,027     2,930,880     431,673  
Non-current assets:          
Long-term investments 45,980     41,235     6,073  
Intangible assets 726     41,166     6,063  
Property and equipment, net 32,341     32,181     4,740  
Deferred tax assets 35,208     37,708     5,554  
Operating lease right-of-use assets 144,488     127,885     18,835  
Prepayment for long-term investment -     14,380     2,118  
Other non-current assets 14,184     14,737     2,171  
Total non-current assets 272,927     309,292     45,554  
Total assets 3,229,954     3,240,172     477,227  
           
Liabilities          
Current liabilities:          
Taxes payable 65,605     39,289     5,788  
Contract liabilities 93,725     116,627     17,177  
Salary and welfare payables 100,676     77,880     11,470  
Amounts due to related parties 2,620     2,379     350  
Accrued expenses and other current liabilities 166,088     228,912     33,716  
Operating lease liabilities-current 37,799     39,696     5,847  
Total current liabilities 466,513     504,783     74,348  
Non-current liabilities:          
Operating lease liabilities-non current 120,803     102,124     15,041  
Deferred tax liabilities -     8,797     1,296  
Total non-current liabilities 120,803     110,921     16,337  
Total liabilities 587,316     615,704     90,685  
           
Shareholders equity:          
Class A Ordinary shares (US$ 0.0005 par value; 750,000,000 shares authorized as of December 31, 2019 and September 30, 2020; 69,371,718 and 70,130,618 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively) 221     224     33  
Class B Ordinary shares (US$ 0.0005 par value; 20,000,000 shares authorized as of December 31, 2019 and September 30, 2020; 12,000,000 shares issued and outstanding as of December 31, 2019 and September 30, 2020) 37     37     5  
Additional paid-in capital 2,799,336     2,867,740     422,372  
Statutory reserves 10,562     10,562     1,556  
Accumulated deficit (259,251 )   (292,875 )   (43,136 )
Accumulated other comprehensive income 91,733     38,780     5,712  
Total shareholdersequity 2,642,638     2,624,468     386,542  
Total liabilities and shareholders equity 3,229,954     3,240,172     477,227  


SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Amounts in thousands, except for share and per share data)

  For the Three Months Ended
  For the Nine Months Ended
  September 30,
2019
  September 30,
2020
  September 30,
2020
  September 30,
2019
  September 30,
2020
  September 30,
2020
  RMB   RMB   US$   RMB   RMB   US$
                       
Revenues                      
Information services 214,349     265,654     39,127     568,905     626,178     92,226  
Reservation services 88,076     93,925     13,833     224,558     244,175     35,963  
Total revenues 302,425     359,579     52,960     793,463     870,353     128,189  
Cost of revenues (53,899 )   (54,743 )   (8,063 )   (140,119 )   (148,586 )   (21,884 )
Gross profit 248,526     304,836     44,897     653,344     721,767     106,305  
Operating expenses:                      
Sales and marketing expenses (156,583 )   (221,620 )   (32,641 )   (337,881 )   (515,919 )   (75,987 )
General and administrative expenses (32,359 )   (50,295 )   (7,408 )   (124,492 )   (134,099 )   (19,751 )
Research and development expenses (39,545 )   (63,150 )   (9,301 )   (122,559 )   (158,272 )   (23,311 )
Total operating expenses (228,487 )   (335,065 )   (49,350 )   (584,932 )   (808,290 )   (119,049 )
Income/(loss) from operations 20,039     (30,229 )   (4,453 )   68,412     (86,523 )   (12,744 )
Other income/(expenses):                      
Investment income 1,082     4,680     689     4,554     10,469     1,542  
Interest income 15,685     7,539     1,110     31,528     32,916     4,848  
Exchange losses (5,694 )   (551 )   (81 )   (3,676 )   (515 )   (76 )
Share of losses of equity method investee -     (1,330 )   (196 )   -     (4,477 )   (659 )
Others, net 3,425     4,535     668     26,687     (2,491 )   (367 )
Income/(loss) before tax 34,537     (15,356 )   (2,263 )   127,505     (50,621 )   (7,456 )
Income tax (expenses)/benefit (2,937 )   16,259     2,395     (20,726 )   17,781     2,619  
Net income/(loss) 31,600     903     132     106,779     (32,840 )   (4,837 )
Accretions of convertible redeemable preferred shares to redemption value -     -     -     (50,219 )   -     -  
Net income/(loss) attributable to ordinary shareholders of the Company 31,600     903     132     56,560     (32,840 )   (4,837 )


SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Continued)
(Amounts in thousands, except for share and per share data)

  For the Three Months Ended
  For the Nine Months Ended
 
  September 30,
2019
  September 30,
2020
  September 30,
2020
  September 30,
2019
  September 30,
2020
  September 30,
2020
 
  RMB   RMB   US$   RMB   RMB   US$  
                         
Net income/(loss) per ordinary share                        
Net earnings/(loss) per ordinary share attributable to ordinary shareholder - basic 0.40     0.01     0.00     1.07     (0.13 )   (0.02 )  
Net earnings/(loss) per ordinary share attributable to ordinary shareholder - diluted 0.38     0.01     0.00     1.00     (0.13 )   (0.02 )  
Net earnings/(loss) per ADS attributable to ordinary shareholders - basic (13 ADS represents 10 Class A ordinary shares) 0.31     0.01     0.00     0.82     (0.10 )   (0.01 )  
Net earnings/(loss) per ADS attributable to ordinary shareholders - diluted (13 ADS represents 10 Class A ordinary shares) 0.29     0.01     0.00     0.77     (0.10 )   (0.01 )  
Weighted average number of ordinary shares used in computing earnings/(loss)  per share, basic* 78,613,419     81,629,610     81,629,610     52,800,398     81,411,972     81,411,972    
Weighted average number of ordinary shares used in computing earnings/(loss)  per share, diluted* 82,888,045     84,069,327     84,069,327     56,764,774     82,954,264     82,954,264    
                         
Share-based compensation expenses included in:                        
Cost of revenues (1,591 )   (5,091 )   (750 )   (8,700 )   (13,287 )   (1,957 )  
Sales and marketing expenses (1,097 )   (2,225 )   (328 )   (6,110 )   (4,528 )   (667 )  
General and administrative expenses (6,415 )   (12,155 )   (1,790 )   (56,505 )   (34,690 )   (5,109 )  
Research and development expenses 208     (6,021 )   (887 )   (16,467 )   (15,188 )   (2,237 )  
*  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,
2019
  September 30,
2020
  September 30,
2020
  September 30,
2019
  September 30,
2020
  September 30,
2020
  RMB   RMB   US$   RMB   RMB   US$
                       
GAAP income/(loss) from operations 20,039   (30,229 )   (4,453 )   68,412   (86,523 )   (12,744 )
Add back: Shared-based compensation expenses 8,895   25,492     3,755     87,782   67,693     9,970  
Non-GAAP income/(loss) from operations 28,934   (4,737 )   (698 )   156,194   (18,830 )   (2,774 )
                       
GAAP Net income/(loss) 31,600   903     132     106,779   (32,840 )   (4,837 )
Add back: Shared-based compensation expenses 8,895   25,492     3,755     87,782   67,693     9,970  
Non-GAAP net income 40,495   26,395     3,887     194,561   34,853     5,133