20-F: So-Young International Inc. FY2025 Filing Analysis

So-Young International Inc. reports increased revenues in FY2025 driven by aesthetic center expansion, despite a decline in information and reservation services.

Summary

• So-Young International Inc. reported total revenues of RMB1,523.4 million (US$217.8 million) for the fiscal year ended December 31, 2025, a 3.9% increase from RMB1,466.7 million in 2024.
• The growth was primarily driven by a significant 298.7% increase in revenues from aesthetic treatment services, reaching RMB674.9 million (US$96.5 million), due to the expansion of its branded aesthetic centers.
• However, revenues from information and reservation services decreased by 32.2% to RMB499.7 million (US$71.5 million), and sales of medical products and maintenance services decreased by 27.2% to RMB267.8 million (US$38.3 million).
• The company reported a net loss of RMB246.9 million (US$35.3 million) for FY2025, an improvement from a net loss of RMB587.2 million in FY2024, but still a loss compared to a net income of RMB25.9 million in FY2023.
• Gross profit decreased by 19.1% to RMB727.7 million (US$104.1 million) in FY2025, with the gross margin declining from 61.3% in 2024 to 47.8% in 2025, largely due to the higher cost of aesthetic treatment services.
• Operating expenses increased by 6.9% in sales and marketing and 1.4% in general and administrative expenses, while research and development expenses decreased by 17.0%.
• The company had cash, cash equivalents, and restricted cash of RMB432.6 million (US$61.9 million) as of December 31, 2025.
• The company regained compliance with Nasdaq's minimum bid price requirement in July 2025 after transferring to the Nasdaq Capital Market.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to declining gross margins, reduced revenue in key segments, and continued net losses, despite revenue growth in aesthetic treatment services.

Positives

• Revenues increased by 3.9% to RMB1,523.4 million (US$217.8 million) in FY2025.
• Aesthetic treatment services revenue saw a substantial increase of 298.7% to RMB674.9 million (US$96.5 million) due to the expansion of branded aesthetic centers.
• The company regained compliance with Nasdaq's minimum bid price requirement in July 2025.
• Cash, cash equivalents, and restricted cash stood at RMB432.6 million (US$61.9 million) as of December 31, 2025, indicating sufficient liquidity for the next 12 months.
• Net loss improved to RMB246.9 million (US$35.3 million) in FY2025 from RMB587.2 million in FY2024.

Negatives

• Gross profit decreased by 19.1% to RMB727.7 million (US$104.1 million) in FY2025.
• Gross margin declined significantly from 61.3% in 2024 to 47.8% in 2025.
• Revenues from information and reservation services decreased by 32.2% to RMB499.7 million (US$71.5 million).
• Sales of medical products and maintenance services decreased by 27.2% to RMB267.8 million (US$38.3 million).
• The company incurred a net loss of RMB246.9 million (US$35.3 million) in FY2025, following a net loss of RMB587.2 million in FY2024.
• The company recorded an impairment of goodwill and long-lived assets of RMB19.7 million (US$2.8 million) in FY2025, following a significant goodwill impairment of RMB540.0 million in FY2024.

Risks

• The online medical aesthetic service industry is rapidly evolving, making future prospects difficult to evaluate.
• The company has experienced revenue and profitability declines in the past and cannot guarantee future growth.
• Potential for consumer claims, regulatory investigations, and litigations regarding services offered on the platform or in branded aesthetic centers.
• Characterization of business activities as medical, drug, or medical device advertisement distribution without proper licenses could impact operations.
• Expansion plans into new business lines, categories, and geographic areas are subject to uncertainties and risks.
• The company relies on contractual arrangements with VIEs, which may not be as effective as direct ownership for operational control.
• Uncertainties exist regarding the interpretation and implementation of PRC laws and regulations, particularly concerning foreign investment and VIE structures.
• The company's ADSs may be prohibited from trading in the United States under the HFCAA if the PCAOB is unable to inspect auditors in China in the future.
• The trading price of the ADSs has been and is likely to continue to be volatile.
• The company's dual-class voting structure limits shareholders' ability to influence corporate matters.
• The company may be subject to limitations on transfer of ADSs and difficulties in protecting shareholder interests due to its Cayman Islands incorporation.
• The company may be subject to limitations on its ability to use its revenues effectively due to governmental control of currency conversion.
• The company faces risks related to health epidemics, natural disasters, and other outbreaks that could disrupt operations.
• The company's business is subject to data privacy laws and regulations in China and other jurisdictions, with potential material adverse impacts from non-compliance.
• Failure to protect content and intellectual property could harm the business and competitive position.
• Fraudulent or illegal activities on the platform could negatively impact brand and reputation.
• The company may not be able to satisfy continued listing requirements of the Nasdaq Capital Market.
• The company may be classified as a passive foreign investment company (PFIC), which could result in adverse U.S. federal income tax consequences for U.S. Holders.

Future Outlook

The company plans to continue expanding its branded aesthetic center network to drive revenue growth and leverage economies of scale. It will also focus on developing and launching new products and optimizing marketing expenses to improve profitability.

Management Comments

• The company's expansion of branded aesthetic centers has been a key driver of revenue growth.
• The company continues to refine its site selection strategy, strengthen operational oversight, and invest in training to support sustainable development.
• The company plans to continue monitoring and optimizing expenses across various marketing channels to grow its businesses and achieve profitability.
• The company believes its ability to grow depends on its ability to continue to upgrade and utilize its technological capabilities.

Industry Context

StockSavvy.ai notes that So-Young International Inc.'s performance reflects trends in China's medical aesthetics market, with a shift towards offline services driving revenue growth, while online platform engagement faces challenges from increased competition and macroeconomic headwinds.

Comparison to Industry Standards

• The company's gross margin of 47.8% in FY2025 is lower than the 61.3% reported in FY2024, indicating potential pressure on profitability as the business model shifts towards higher-cost aesthetic center operations.
• The significant revenue growth in aesthetic treatment services (298.7%) highlights a broader industry trend of consumers seeking more direct, in-person aesthetic services, a strategy also pursued by competitors like LOHAS Medical Group and New Horizon Health Holdings.
• The decline in information and reservation services revenue suggests increased competition for online traffic and user engagement, a challenge faced by other platforms in the digital health and wellness sector.
• The company's net loss in FY2025, though improved from FY2024, indicates ongoing investment in growth and market expansion, a common characteristic of companies in the rapidly developing medical aesthetics sector.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently a party to any pending or threatened legal, arbitral, or administrative proceedings that are likely to have a material adverse effect on its financial condition or results of operations.
• The company may be subject to liabilities for infringement, misappropriation, or other violations of third-party intellectual property rights due to content on its platform.

Related Party Transactions

• The company engaged in various transactions with related parties, including equity investments in companies like Beijing Mevos, Chengdu Zhisu, First BCC, Xingying, Sharing New Medical, Beijing Souyang, Zhejiang Xinyang, and Shanghai Miaoyu.
• Transactions included provision of services, loans advanced to and repaid by related parties, and incurring expenses for consulting and property management services from related entities.
• The company provided information and reservation services to Chengdu Zhisu, First BCC, and Xingying.
• The company provided loans to Sharing New Medical and Zhejiang Xinyang.
• The company incurred expenses for consulting services from Beijing Mevos and Yicai, and property management services from Future Light.
• The company also had transactions with Yinchuxing and Chutian for rental services.

Stakeholder Impact

• Shareholders may experience dilution if the company issues additional equity or debt.
• ADS holders may face difficulties in exercising voting rights due to the depositary agreement and dual-class share structure.
• Investors may be subject to adverse U.S. federal income tax consequences if the company is classified as a Passive Foreign Investment Company (PFIC).
• The company's reliance on contractual arrangements with VIEs introduces risks related to PRC regulatory changes and enforceability.
• Employees are subject to PRC labor laws and social security contributions, which may increase labor costs.

Next Steps

• Continue to expand the network of branded aesthetic centers.
• Focus on improving operational efficiency and managing costs.
• Monitor and adapt to evolving regulatory frameworks in China.
• Continue to invest in technology and data analytics capabilities.
• Manage cybersecurity risks and ensure data privacy compliance.

Key Dates

Recommendation

While the expansion of aesthetic centers shows strategic growth, the declining gross margins, reduced revenue in core segments, continued net losses, and significant goodwill impairment in FY2024 indicate ongoing challenges. The company's ability to navigate competition and regulatory risks, coupled with improving profitability in its new ventures, warrants a hold recommendation pending clearer signs of sustained financial improvement.

Keywords

So-Young International Inc., SEC Filing, Form 20-F, Annual Report, Medical Aesthetics, Online Platform, Aesthetic Centers, Revenue Growth, Net Loss, Financial Performance, China Market, VIE Structure, Nasdaq Listing, Goodwill Impairment, Share Repurchase