So-Young International ((SY)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for So-Young International highlighted a mixed sentiment, with notable growth in their aesthetic center business and high customer satisfaction levels. However, the financial results were marred by a significant goodwill impairment and declining revenues from So-Young Prime, resulting in an overall net loss. Despite these challenges, the company maintains a robust cash position, offering a solid foundation for future growth, although rising operating expenses remain a concern.
Aesthetic Center Business Growth
The aesthetic center business experienced remarkable growth, with revenues surging to RMB81.3 million during the quarter. This represents a 79% increase quarter-over-quarter and an impressive 702% year-over-year growth. The company reported 38,000 verified paid visits and over 81,500 verified paid aesthetic treatments, underscoring the strong demand and operational success in this segment.
Expansion of So-Young Clinics
So-Young International expanded its footprint by opening 19 new clinics across nine core cities in Q4. Notably, 11 of these clinics achieved positive monthly operating cash flow by December, indicating a strong urban presence and successful operational execution.
Strong Customer Satisfaction
Customer satisfaction remains a key strength for So-Young, with a score of 4.98 out of 5, reflecting the high quality of service delivery and positive customer experiences. This industry-leading score highlights the company’s commitment to maintaining superior service standards.
Robust Cash Position
The company reported a robust cash position, with cash and cash equivalents, restricted cash, and term deposits totaling RMB1.25 billion as of December 31, 2024. This strong cash reserve provides a solid foundation for future growth initiatives and financial stability.
Net Loss Due to Goodwill Impairment
So-Young International reported a net loss of RMB607.6 million, primarily driven by a onetime goodwill impairment charge of RMB540 million related to its subsidiary, Wuhan Miracle. This significant charge has negatively impacted the company’s financial results for the quarter.
Decrease in Revenue from So-Young Prime
Total revenues for the quarter were RMB369.2 million, marking a 5.5% year-over-year decline. This decrease was primarily attributed to reduced revenue from So-Young Prime, highlighting challenges in this segment.
Increased Operating Expenses
Operating expenses rose significantly to RMB815.2 million, up 216.2% year-over-year. This substantial increase has put pressure on the company’s profitability, raising concerns about cost management.
Decline in Sales of Medical Products
Sales of medical products and maintenance services fell to RMB86.2 million, a 15.2% year-over-year decrease. This decline was mainly due to a reduction in order volume for medical equipment, impacting this revenue stream.
Forward-Looking Guidance
Looking ahead, So-Young International projects total revenues between RMB280 million and RMB300 million for the first quarter of 2025. The company anticipates steady financial improvements driven by ongoing expansion and market stabilization. The continued focus on vertical integration and clinic expansion is expected to support future growth.
In summary, the earnings call for So-Young International presented a mixed picture, with strong growth in the aesthetic center business and high customer satisfaction contrasted by financial challenges due to goodwill impairment and declining revenues in certain segments. The company’s robust cash position and strategic expansion efforts provide a positive outlook for future growth, although managing operating expenses will be crucial for sustained profitability.