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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
Third Quarter 2022 Operational Highlights
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. |
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.
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.
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 | 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 | 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; | 230 | 232 | 32 | |||
Class B Ordinary shares (US$ 0.0005 par value; 20,000,000 | 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 | September | September | September | September | September | |||||||
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 | 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 - | 0.08 | 0.03 | 0.00 | 0.23 | (1.17) | (0.16) | |||||||
Net earnings/(loss) per ADS attributable to ordinary shareholders - basic (13 | 0.06 | 0.02 | 0.00 | 0.18 | (0.90) | (0.12) | |||||||
Net earnings/(loss) per ADS attributable to ordinary shareholders - diluted (13 | 0.06 | 0.02 | 0.00 | 0.18 | (0.90) | (0.12) | |||||||
Weighted average number of ordinary shares used in computing earnings/(loss) | 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) | 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 | September | September | September | September | September | |||||||
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.