GlobeNewswire Inc | Nov 25, 2020 05:30AM EST

November 25, 2020

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 September30, 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-Youngs platform was RMB1,110.1 million. -- Number of paying medical service providers on So-Youngs 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, were 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 servicesrevenues 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-Youngs platform were 2,146. -- Reservation servicesrevenues 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 marketingexpenses 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 toan 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 administrativeexpenses 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 developmentexpenses 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 September30, 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 RMB2,844.0million as of December31, 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 Companys 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 Companys operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess the Companys 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 Companys 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 Companys 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 InformationSo-Youngs 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: +61-2-8199-0299US: +1-646-254-3697Passcode: 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-Youngs 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 StatementThis 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-Youngs 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-Youngs 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-Youngs strategies; So-Youngs future business development, financial condition and results of operations; So-Youngs 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-Youngs 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-Youngs 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 Companys 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 RelationsMs.Vivian XUPhone:+86-10-8790-2012E-mail: ir@soyoung.com

Christensen

In ChinaMr.Eric YuanPhone: +86-10-5900-1548E-mail: Eyuan@christensenir.com

In USMs.Linda BergkampPhone: +1-480-614-3004Email: 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 September September 31, 30, 30, 2019 2020 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 166,088 228,912 33,716 liabilitiesOperating 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: ClassA Ordinary shares (US$0.0005 parvalue; 750,000,000 shares authorized asof December31, 2019 and September 30,2020; 69,371,718 and 70,130,618 shares 221 224 33 issued and outstanding as of December31,2019 and September 30, 2020,respectively)ClassB Ordinary shares (US$0.0005 parvalue; 20,000,000 shares authorized as ofDecember31, 2019 and September30, 2020; 37 37 5 12,000,000 shares issued and outstandingas of December31, 2019 and September 30,2020)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 shareholders? equity 2,642,638 2,624,468 386,542 Total liabilities and shareholders? 3,229,954 3,240,172 477,227 equity

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 September September September September September 30, 30, 30, 30, 30, 30, 2019 2020 2020 2019 2020 2020 RMB RMB US$ RMB RMB US$ Revenues Information 214,349 265,654 39,127 568,905 626,178 92,226 servicesReservation 88,076 93,925 13,833 224,558 244,175 35,963 servicesTotal revenues 302,425 359,579 52,960 793,463 870,353 128,189 Cost of (53,899 ) (54,743 ) (8,063 ) (140,119 ) (148,586 ) (21,884 )revenuesGross profit 248,526 304,836 44,897 653,344 721,767 106,305 Operating expenses:Sales andmarketing (156,583 ) (221,620 ) (32,641 ) (337,881 ) (515,919 ) (75,987 )expensesGeneral andadministrative (32,359 ) (50,295 ) (7,408 ) (124,492 ) (134,099 ) (19,751 )expensesResearch anddevelopment (39,545 ) (63,150 ) (9,301 ) (122,559 ) (158,272 ) (23,311 )expensesTotaloperating (228,487 ) (335,065 ) (49,350 ) (584,932 ) (808,290 ) (119,049 )expensesIncome/(loss)from 20,039 (30,229 ) (4,453 ) 68,412 (86,523 ) (12,744 )operationsOther income/ (expenses):Investment 1,082 4,680 689 4,554 10,469 1,542 incomeInterest 15,685 7,539 1,110 31,528 32,916 4,848 incomeExchange (5,694 ) (551 ) (81 ) (3,676 ) (515 ) (76 )lossesShare oflosses of - (1,330 ) (196 ) - (4,477 ) (659 )equity methodinvesteeOthers, net 3,425 4,535 668 26,687 (2,491 ) (367 )Income/(loss) 34,537 (15,356 ) (2,263 ) 127,505 (50,621 ) (7,456 )before taxIncome tax(expenses)/ (2,937 ) 16,259 2,395 (20,726 ) 17,781 2,619 benefitNet income/ 31,600 903 132 106,779 (32,840 ) (4,837 )(loss)Accretions ofconvertibleredeemablepreferred - - - (50,219 ) - - shares toredemptionvalueNet income/(loss)attributable 31,600 903 132 56,560 (32,840 ) (4,837 )to ordinaryshareholdersof the Company

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, September 30, September 30, September 30, September 30, September 30, 2019 2020 2020 2019 2020 2020 RMB RMB US$ RMB RMB US$ Net income/(loss) per ordinary shareNet earnings/(loss) perordinary shareattributable 0.40 0.01 0.00 1.07 (0.13 ) (0.02 ) to ordinaryshareholder -basicNet earnings/(loss) perordinary shareattributable 0.38 0.01 0.00 1.00 (0.13 ) (0.02 ) to ordinaryshareholder -dilutedNet earnings/(loss) per ADSattributableto ordinaryshareholders - 0.31 0.01 0.00 0.82 (0.10 ) (0.01 ) basic (13 ADSrepresents 10Class Aordinaryshares)Net earnings/(loss) per ADSattributableto ordinaryshareholders - 0.29 0.01 0.00 0.77 (0.10 ) (0.01 ) diluted (13ADS represents10 Class Aordinaryshares)Weightedaverage numberof ordinaryshares used in 78,613,419 81,629,610 81,629,610 52,800,398 81,411,972 81,411,972 computingearnings/(loss) pershare, basic*Weightedaverage numberof ordinaryshares used incomputing 82,888,045 84,069,327 84,069,327 56,764,774 82,954,264 82,954,264 earnings/(loss) pershare,diluted* Share-basedcompensation expensesincluded in:Cost of (1,591 ) (5,091 ) (750 ) (8,700 ) (13,287 ) (1,957 ) revenuesSales andmarketing (1,097 ) (2,225 ) (328 ) (6,110 ) (4,528 ) (667 ) expensesGeneral andadministrative (6,415 ) (12,155 ) (1,790 ) (56,505 ) (34,690 ) (5,109 ) expensesResearch anddevelopment 208 (6,021 ) (887 ) (16,467 ) (15,188 ) (2,237 ) expenses^* Both Class A and Class B ordinary shares are included in the calculationof the weighted average number of ordinary shares outstanding, basic anddiluted.

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 30, 30, 30, 30, 30, 30, 2019 2020 2020 2019 2020 2020 RMB RMB US$ RMB RMB US$ GAAP income/(loss) from 20,039 (30,229 ) (4,453 ) 68,412 (86,523 ) (12,744 )operationsAdd back:Shared-based 8,895 25,492 3,755 87,782 67,693 9,970 compensationexpensesNon-GAAPincome/ 28,934 (4,737 ) (698 ) 156,194 (18,830 ) (2,774 )(loss) fromoperations GAAP Netincome/ 31,600 903 132 106,779 (32,840 ) (4,837 )(loss)Add back:Shared-based 8,895 25,492 3,755 87,782 67,693 9,970 compensationexpensesNon-GAAP net 40,495 26,395 3,887 194,561 34,853 5,133 income