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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

For the fiscal year ended December 31, 2023.

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from          to           

Commission file number: 001-38878

So-Young International Inc.

(Exact name of Registrant as specified in its charter)

NA

(Translation of Registrant’s name into English)

 

Cayman Islands

(Jurisdiction of incorporation or organization)

Tower E, Ronsin Technology Center

Chaoyang District, Beijing 100012

People’s Republic of China

(Address of principal executive offices)

Hui Zhao, Chief Financial Officer

Tower E, Ronsin Technology Center,

Chaoyang District, Beijing 100012

People’s Republic of China

Phone: +86 (10)-8790-2012

Email: ir@soyoung.com

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of Each Class

 

Trading

 

Name of Each Exchange On Which Registered

American depositary shares, 13 of which represent 10 Class A ordinary shares, par value US$0.0005 per share*

 

SY

 

The Nasdaq Stock Market LLC (The Nasdaq Global Market)

* Not for trading, but only in connection with the listing on the Nasdaq Global Market of American depositary shares.

 

 

 

 

Securities registered or to be registered pursuant to Section 12(g) of the Act

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

As of December 31, 2023, there were 75,422,436 ordinary shares outstanding, par value of US$0.0005 per share, being the sum of 63,422,436 Class A ordinary shares (excluding treasury shares), par value of US$0.0005 per share and 12,000,000 Class B ordinary shares, par value of US$0.0005 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes   No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes   No

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

 

Emerging growth company 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP

International Financial Reporting Standards as issued
by the International Accounting Standards Board

Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17   Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes   No

TABLE OF CONTENTS

INTRODUCTION

1

FORWARD-LOOKING STATEMENTS

4

Part I

5

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

5

Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

5

Item 3. KEY INFORMATION

5

Item 4. INFORMATION ON THE COMPANY

60

Item 4A. UNRESOLVED STAFF COMMENTS

100

Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

100

Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

114

Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

126

Item 8. FINANCIAL INFORMATION

129

Item 9. THE OFFER AND LISTING

131

Item 10. ADDITIONAL INFORMATION

131

Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

147

Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

147

Part II

150

Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

150

Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

150

Item 15. CONTROLS AND PROCEDURES

150

Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT

151

Item 16B. CODE OF ETHICS

151

Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

152

Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

152

Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

153

Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

153

Item 16G. CORPORATE GOVERNANCE

154

Item 16H. MINE SAFETY DISCLOSURE

154

Item 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

154

Item16J. INSIDER TRADING POLICIES

154

Item16K. CYBERSECURITY

155

Part III

157

Item 17. FINANCIAL STATEMENTS

157

Item 18. FINANCIAL STATEMENTS

157

Item 19. EXHIBITS

157

SIGNATURES

160

i

INTRODUCTION

Unless otherwise indicated and except where the context otherwise requires, references in this annual report on Form 20-F to:

“ADRs” are to the American depositary receipts that evidence our ADSs;
“ADSs” are to our American depositary shares, with every 13 ADSs representing 10 Class A ordinary shares;
“Class A ordinary shares” are to our Class A ordinary shares, par value US$0.0005 per share;
“Class B ordinary shares” are to our Class B ordinary shares, par value US$0.0005 per share;
“mobile MAUs” are to the sum of (i) the number of unique mobile devices that have accessed our platform through our So-Young mobile app at least once during a month, and (ii) the number of unique Weixin users that have accessed our platform through our Weixin mini programs at least once during a month. The numbers of our mobile MAUs are calculated using internal company data that has not been independently verified, and we treat each distinguishable device and Weixin user account as a separate user for purposes of calculating mobile MAUs, although inaccuracy may result from the possibility that some individuals may use more than one mobile device, may share the same mobile device with other individuals, and/or may use both our mobile app and Weixin mini programs to access our platform;
“monthly UVs” of soyoung.com, are to the number of unique IP address that various internet browsers apply to access our website, from either PC end or mobile end, at least once during a month. The numbers of our monthly UVs of soyoung.com are calculated using internal company data that has not been independently verified, and we treat each distinguishable IP address as a separate user for purposes of calculating monthly UVs, although inaccuracy may result from the possibility that some individuals may have more than one IP address and/or share the same IP address with other individuals to access our platform;
“the variable interest entities,” “the VIEs” and “the consolidated affiliated entities” are to Beijing So-Young Technology Co., Ltd., or Beijing So-Young, and Beijing Chiyan Medical Beauty Consulting, Ltd., or Beijing Chiyan;
“our WFOE” are to So-Young Wanwei Technology Consulting Co., Ltd., or Beijing Wanwei;
“RMB” and “Renminbi” are to the legal currency of mainland China;
“So-Young,” “we,” “us,” “our company” and “our” are to So-Young International Inc., our Cayman Islands holding company, its subsidiaries, and in the context of describing our operations and consolidated financial information, the VIEs and the subsidiaries of the VIEs;
“shares” or “ordinary shares” are to our Class A and Class B ordinary shares, par value US$0.0005 per share;
“US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States; and
“Wuhan Miracle” are to Wuhan Miracle Laser Systems, Inc.

Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report are made at a rate of RMB7.0999 to US$1.00, the exchange rate in effect as of December 29, 2023 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all.

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Summary of Risk Factors

An investment in our ADSs or Class A ordinary shares involves significant risks. Below is a summary of material risks we face, organized under relevant headings. These risks are discussed more fully in “Item 3. Key Information—D. Risk Factors.”

Risks Related to Our Business and Industry

Risks and uncertainties related to our business and industry include, but are not limited to, the following:

the online medical aesthetic service industry is rapidly evolving, which makes it difficult to evaluate our future prospects;
we have experienced revenue and profitability declines in the past, and we cannot guarantee that we will be able to maintain revenue or profitability growth in the future. If we are unable to maintain growth, our business and prospects may be materially and adversely affected;
we may be subject to consumer claims, regulatory or professional investigations and litigations regarding the medical information and services offered on our platform, which could materially and adversely affect our brand, reputation, and results of operations;
characterization of our business as engaging in medical, drug and/or medical device advertisement distribution in China without proper licenses or permits may have material impacts on our operations;
we face risks associated with our acquisition of Wuhan Miracle and its business;
if we fail to anticipate user preferences and provide high-quality and reliable content in a cost-effective manner, we may not be able to attract and retain users to remain competitive;
if content providers do not continue to contribute content that is high-quality, reliable or otherwise valuable to our users, we may experience a decline in user traffic and user engagement;
our business may be materially and adversely affected by an unfavorable market perception of the overall medical aesthetic industry;
we depend significantly on the strength of our brand and reputation. Any failure to maintain and enhance, or any damage to, our brand image or reputation could materially and adversely affect our business, results of operations, financial condition and prospects;
if we fail to meet the changes or developments in the regulatory framework in China with respect to the provision of online medical aesthetic services industry, our reputation may be harmed and our financial condition and results of operations may be materially and adversely affected;
we face risks related to health epidemics, natural disasters, and other outbreaks, which could significantly disrupt our operations; and
our business is subject to data privacy laws and regulations in jurisdictions other than China. Any failure or perceived failure to comply with such laws and regulations could have a material and adverse impact on our business, financial condition and results of operations.

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Risks Related to Our Corporate Structure

Risks and uncertainties related to our corporate structure include, but are not limited to, the following:

if the PRC government finds that the agreements that establish the structure for operating our operations in China do not comply with regulations of mainland China relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
we rely on contractual arrangements with the consolidated affiliated entities and their respective shareholders for our business operations, which may not be as effective as direct ownership in providing operational control; and
any failure by the consolidated affiliated entities or their respective shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.

Risks Related to Doing Business in China

Risks and uncertainties related to doing business in China include, but are not limited to, the following:

the PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor in the past has deprived our investors with the benefits of such inspections;
Our ADSs may be prohibited from trading in the United States under the HFCAA, in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.

Risks Related to Our ADSs

Risks and uncertainties related to our ADSs include, but are not limited to, the following:

the trading price of our ADSs has been and is likely to continue to be volatile, which could result in substantial losses to investors;
our dual-class voting structure limits your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial; and
we cannot guarantee that any share repurchase program will enhance long-term shareholder value, and share repurchases could increase the volatility of the price of our ADSs and could diminish our cash reserves.

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FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the sections entitled “Item 3. Key Information—D. Risk Factors” “Item 4. Information on the Company—B. Business Overview” and “Item 5. Operating and Financial Review and Prospects.” Known and unknown risks, uncertainties and other factors, including those listed under “Item 3. Key Information—D. Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

our mission, goals;
our ability to retain and increase the number of users and expand our service offerings;
our future business development, financial conditions and results of operations;
expected changes in our revenues, costs or expenditures;
the trends in, expected growth and the market size of the online medical aesthetics industry, both in the PRC and globally;
our expectations regarding demand for and market acceptance of our services;
our expectations regarding our relationships with users and service providers;
our use of proceeds;
competition in our industry;
general economic and business conditions in the market we have business; and
relevant government policies and regulations relating to our industry.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Item 3. Key Information—D. Risk Factors” “Item 4. Information on the Company—B. Business Overview” and “Item 5. Operating and Financial Review and Prospects” and other sections in this annual report. You should read thoroughly this annual report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Our Holding Company Structure and Contractual Arrangements with the Consolidated Affiliated Entities

So-Young International Inc. is not a Chinese operating company, but rather a Cayman Islands holding company with no equity ownership in its consolidated affiliated entities. Our Cayman Islands holding company does not conduct business operations directly. We conduct our operations in mainland China through (i) our subsidiaries in mainland China and (ii) the consolidated affiliated entities with which we have maintained contractual arrangements and their subsidiaries in mainland China. Laws and regulations of mainland China impose certain restrictions or prohibitions on foreign ownership of companies that engage in certain value-added telecommunication services, internet audio-video program services and certain other businesses. Accordingly, we operate these businesses in mainland China through the consolidated affiliated entities and their subsidiaries, and rely on contractual arrangements among our subsidiaries, the consolidated affiliated entities and their nominee shareholders to control the business operations of the consolidated affiliated entities. The consolidated affiliated entities are consolidated for accounting purposes, but are not entities in which our Cayman Islands holding company, or our investors, own equity. Revenues contributed by the consolidated affiliated entities, excluding inter-company transactions, accounted for 93.0%, 78.9% and 80.4% of our total revenues for the years ended December 31, 2021, 2022 and 2023, respectively. As used in this annual report, “we,” “us,” “our company,” “our,” or “So-Young” refers to So-Young International Inc., its subsidiaries, and, in the context of describing our operations and consolidated financial information, the consolidated affiliated entities and their subsidiaries in mainland China. Investors in our ADSs are not purchasing equity interest in the consolidated affiliated entities in mainland China, but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands.

A series of contractual agreements, including equity pledge agreement, exclusive option agreement, exclusive business cooperation agreement, power of attorney and spousal consent letter, have been entered into by and among our subsidiaries, the consolidated affiliated entities and their respective shareholders. Terms contained in each set of contractual arrangements with the consolidated affiliated entities and their respective shareholders are substantially similar. Despite the lack of legal majority ownership, our Cayman Island holding company is considered the primary beneficiary of the consolidated affiliated entities and consolidates the consolidated affiliated entities and their subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the consolidated affiliated entities as the consolidated entities under U.S. GAAP and we consolidate the financial results of the consolidated affiliated entities in the consolidated financial statements in accordance with U.S. GAAP. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with the Consolidated Affiliated Entities and Their Respective Shareholders.”

However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the consolidated affiliated entities and we may incur substantial costs to enforce the terms of the arrangements. If the consolidated affiliated entities or the nominee shareholders fail to perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements that give us effective control over the consolidated affiliated entities, and these agreements have not been tested in courts of mainland China. Furthermore, if we are unable to maintain effective control, we would not be able to continue to consolidate the financial results of these entities in our financial statements. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the consolidated affiliated entities and their respective shareholders for our business operations, which may not be as effective as direct ownership in providing operational control” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the consolidated affiliated entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.”

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There are also substantial uncertainties regarding the interpretation and application of current and future laws, regulations and rules of mainland China regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the consolidated affiliated entities and their nominee shareholders. It is uncertain whether any new laws or regulations of mainland China relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the consolidated affiliated entities is found to be in violation of any existing or future laws or regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating our operations in China do not comply with regulations of mainland China relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “—Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.”

Our corporate structure is subject to risks associated with our contractual arrangements with the consolidated affiliated entities. Our company and its investors may never have a direct ownership interest in the businesses that are conducted by the consolidated affiliated entities. Uncertainties in the legal system of mainland China could limit our ability to enforce these contractual arrangements, and these contractual arrangements have not been tested in a court of law. If the PRC government finds that the agreements that establish the structure for operating our business in China do not comply with laws and regulations of mainland China, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we and the consolidated affiliated entities could be subject to severe penalties or be forced to relinquish our interests in those operations. This would result in the consolidated affiliated entities being deconsolidated. The majority of our assets, including the necessary licenses to conduct business in China, are held by the consolidated affiliated entities. The majority of our revenues are generated by the consolidated affiliated entities. An event that results in the deconsolidation of the consolidated affiliated entities would have a material effect on our operations and result in the value of the securities of our company diminish substantially or even become worthless. Our company, our subsidiaries and consolidated affiliated entities in mainland China, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the consolidated affiliated entities and, consequently, significantly affect the financial performance of the consolidated affiliated entities and our company as a whole. So-Young International Inc. may not be able to repay its indebtedness, and the ADSs of our company may decline in value or become worthless, if we are unable to assert our contractual control rights over the assets of our subsidiaries in mainland China and consolidated affiliated entities that conduct all or substantially all of our operations. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.”

Other Risks related to our Operations in Mainland China

We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving laws and regulations of mainland China. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. We also face risks associated with the lack of inspection by the Public Company Accounting Oversight Board, or the PCAOB, on our auditors as discussed under “—The Holding Foreign Companies Accountable Act.” These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline. For a detailed description of risks related to doing business in China, “Item 3.D. Key Information—Risk Factors—Risks Related to Doing Business in China.”

PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.”

6

Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the legal system of mainland China could adversely affect us.”

The Holding Foreign Companies Accountable Act

The HFCAA states that if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we file our annual report on Form 20 - F for the fiscal year ended December 31, 2022 and do not expect to be identified as such after we file this annual report on Form 20-F. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor in the past has deprived our investors with the benefits of such inspections” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA, in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

Cash Flows through Our Organization

We have established stringent controls and procedures for cash flows within our organization. Each transfer of cash between our Cayman Islands holding company and a subsidiary, the consolidated affiliated entities or the subsidiaries of the consolidated affiliated entities is subject to internal approval. The cash inflows of the Cayman Islands holding company were primarily generated from the proceeds we received from our public offerings of ordinary shares, historical financing activities and cash provided by our operating activities. In 2021, 2022 and 2023, the Cayman Islands holding company transferred cash in the total amount of RMB860.0 million, nil and RMB38.0 million (US$5.4 million) to our subsidiaries in mainland China, the consolidated affiliated entities and their subsidiaries through our offshore intermediate holding entities. For the years ended December 31, 2021, 2022 and 2023, no assets other than cash were transferred between the Cayman Islands holding company and a subsidiary, a consolidated affiliated entity or its subsidiary, no subsidiaries paid dividends or made other distributions to the holding company, and no dividends or distributions were paid or made to U.S. investors. Pursuant to the Exclusive Business Cooperation Agreements between our wholly-owned subsidiary in mainland China and the VIEs, the amount of service fee and payment method shall be determined by the wholly-owned subsidiary in mainland China. The VIEs have paid RMB826.5 million, RMB264.0 million and RMB264.1 million (US$37.2 million) of service fee to the wholly-owned subsidiary in mainland China under the VIE arrangements for the years ended December 31, 2021, 2022 and 2023, respectively. The VIEs expect to continue to settle any service fees incurred under the Exclusive Business Cooperation Agreements.

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As a Cayman Islands holding company, we may receive dividends from our subsidiaries in mainland China. Under the Enterprise Income Tax Law of the PRC, and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our subsidiaries in mainland China, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax. Undistributed profits earned by foreign-invested enterprises prior to January 1, 2008 are exempted from any withholding tax. The Cayman Islands, where So-Young International Inc., the direct parent company of our subsidiaries, is incorporated, does not have such a tax treaty with China. Hong Kong has a tax arrangement with China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the enterprise in mainland China distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. For example, So-Young Hong Kong Limited, which directly owns our subsidiary in mainland China, Beijing Wanwei, is incorporated in Hong Kong. However, if So-Young Hong Kong Limited is not considered to be the beneficial owner of the dividends paid to it by Beijing Wanwei under the tax circulars promulgated in February and October 2009, such dividends would be subject to withholding tax at a rate of 10%. If our subsidiaries in mainland China declare and distribute profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to our company. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Corporate Structure-We may rely on dividends and other distributions on equity paid by our subsidiaries in mainland China to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries in mainland China to make payments to us and any tax we are required to pay could have a material and adverse effect on our ability to conduct our business” for more details. If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-If we are classified as a resident enterprise in mainland China for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our shareholders that are non-resident of mainland China or ADS holders.”

For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay dividends in the future.

    

Tax calculation (1)

Hypothetical pre-tax earnings(2)

 

100

%

Tax on earnings at statutory rate of 25%(3)

  

(25)

%

Net earnings available for distribution

 

75

%

Withholding tax at standard rate of 10%(4)

 

(7.5)

%

Net distribution to Parent/Shareholders

 

67.5

%

Notes:

(1)For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China.
(2)Under the terms of VIE agreements, our subsidiaries in mainland China may charge the VIEs for services provided to VIEs. These service fees shall be recognized as expenses of the VIEs, with a corresponding amount as service income by our subsidiaries in mainland China and eliminate in consolidation. For income tax purposes, our subsidiaries and VIEs in mainland China file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by the VIEs and as income by our subsidiaries in mainland China and are tax neutral.
(3)Certain of our subsidiaries and VIEs qualifies for a 15% preferential income tax rate in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.

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(4)The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.

The table above has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our subsidiaries in mainland China under tax neutral contractual arrangements. If, in the future, the accumulated earnings of the VIEs exceed the service fees paid to our subsidiaries in mainland China (or if the current and contemplated fee structure between the intercompany entities is determined to be non - substantive and disallowed by Chinese tax authorities), the VIEs could make a non-deductible transfer to our subsidiaries in mainland China for the amounts of the stranded cash in the VIEs. This would result in such transfer being non-deductible expenses for the VIEs but still taxable income for the subsidiaries in mainland China.

Under laws and regulations of mainland China, we are subject to restrictions on foreign exchange and cross-border cash transfers, including to U.S. investors. Our ability to distribute earnings to the holding company and U.S. investors is also limited. We are a Cayman Islands holding company, and we may rely on dividends and other distributions on equity paid by our subsidiaries in mainland China, which in turn relies on consulting and other fees paid to us by the consolidated affiliated entities, for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. When any of our subsidiaries in mainland China incurs debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

Our subsidiaries’ ability to distribute dividends is based upon their distributable earnings. Current regulations of mainland China permit our subsidiaries in mainland China to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with accounting standards and regulations in mainland China. In addition, each of our subsidiaries in mainland China and the consolidated affiliated entities is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. These reserves are not distributable as cash dividends.

In 2023, our subsidiary in mainland China, Wuhan Miracle, has declared and paid a dividend for an aggregate amount of RMB36.0 million (US$5.1 million) to its shareholders. Specifically, Wuhan Miracle paid RMB16.5 million (US$2.3 million) to Beijing Wanwei and RMB 15.0 million (US$2.1 million) to Wuhan Zeqi Technology Co., Ltd. (“Wuhan Zeqi”), both of whom are our subsidiaries in mainland China. Wuhan Zeqi later distributed RMB13.0 million (US$1.8 million) from the dividend payment to Beijing Wanwei. The dividend payments are not subject to withholding tax.

In addition, our subsidiaries in mainland China, the consolidated affiliated entities and their subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our subsidiaries in mainland China to pay dividends to us. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our subsidiaries in mainland China to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries in mainland China to make payments to us and any tax we are required to pay could have a material and adverse effect on our ability to conduct our business.” and “—Risks Related to Doing Business in China-Regulation of mainland China of loans to and direct investment in entities in mainland China by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our initial public offering to make loans or to make additional capital contributions to our subsidiaries in mainland China and variable interest entities, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

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Permissions Required from the PRC Authorities for Our Operations

We conduct our business primarily through our subsidiaries and consolidated affiliated entities in China. Our operations in China are governed by laws and regulations of mainland China. As of the date of this annual report, our subsidiaries in mainland China, consolidated affiliated entities and their subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company, the consolidated affiliated entities in China, including, among others, the Value-Added Telecommunications Services Operating License for providing information services via the internet, or the ICP License. We have not obtained certain approvals, licenses and permits that may be required for some aspects of our business operations. For example, we are required to but have not obtained the Audio-Visual License for providing internet audio-visual program services through our online platform, including the provision of original short videos created by ourselves and our service providers. We do not consider such services to be material to our business and the revenues generated through the provision of such services account for an insignificant portion of our total revenues. We are not eligible to apply for an Audio-Visual License under the current regulatory regime, because we are not a wholly state-owned or state-controlled entity as required for this license under laws of mainland China. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our failure to obtain and maintain approvals, licenses or permits applicable to our business could have a material adverse impact on our business, financial conditions and results of operations.”

Furthermore, under current laws, regulations and regulatory rules of mainland China, we, our subsidiaries in mainland China and the consolidated affiliated entities may be required to fulfill filing and reporting procedures to the China Securities Regulatory Commission, or the CSRC, in connection with offering and listing in an overseas market. For example, if we plan to conduct securities offering in an overseas market different from the market where we are currently listed, we may be required to fulfill filing and reporting requirement. In addition to the above filing and reporting requirements, we may also be required to report to the CSRC within three business days upon the occurrence and public disclosure of any the following events: (i) change of control; (ii) investigation or sanctions by any overseas securities regulators or overseas authorities; (iii) change of listing status or listing segment; (iv) voluntary or mandatory delisting; and (v) material change of principal business operations after overseas issuance and listing. Additionally, we, our subsidiaries in mainland China and the consolidated affiliated entities may also be required to go through cybersecurity review by the Cyberspace Administration of China. As of the date of this annual report, we have not been subject to any cybersecurity review made by the administration. If we fail to complete the filing or reporting procedures for any future offshore offering or listing or if any of the specified events occur, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China, restrictions on or delays to our future financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. For more detailed information, see “Item 3. Key Information-D. Risk Factors-Risks Relating to Doing Business in China-The approval of and/or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under laws of mainland China, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” and “-Risks Related to Our Business and Industry-Our business is subject to data privacy laws and regulations in jurisdictions other than China. Any failure or perceived failure to comply with such laws and regulations could have a material and adverse impact on our business, financial condition and results of operations.”

Financial Information Related to the Consolidated Affiliated Entities

The following table presents the condensed consolidating schedule of financial position for the consolidated affiliated entities and other entities as of the dates presented.

10

Selected Condensed Consolidated Statements of Income/(Loss) Information

    

For the year ended December 31, 2023

    

Primary

    

VIEs and

Other 

Beneficiary

 VIEs’

    

Eliminating

Consolidated

    

Parent

    

Subsidiaries

    

of VIEs

    

Subsidiaries

    

Adjustments

    

Totals

RMB

(in thousands)

Third-party revenues from services and sales

 

461

 

293,814

 

1,203,754

 

 

1,498,029

Inter-company revenues from services and sales

 

868

 

280,701

 

19,466

 

(301,035)

 

Total revenues

 

1,329

 

574,515

 

1,223,220

 

(301,035)

 

1,498,029

Third-party costs from services and sales

 

(1,294)

 

(154,899)

 

(388,143)

 

 

(544,336)

Inter-company costs from services and sales

 

(468)

 

(18,605)

 

(280,781)

 

299,854

 

Total costs

 

(1,762)

 

(173,504)

 

(668,924)

 

299,854

 

(544,336)

Total operating expenses

(8,786)

 

(11,746)

 

(441,816)

 

(552,945)

 

553

 

(1,014,740)

Income/(Loss) from subsidiaries and VIEs

17,230

 

(2,015)

 

9,171

 

 

(24,386)

 

Other non-operating income

12,836

 

31,701

 

23,448

 

931

 

 

68,916

Income/(Loss) before tax

21,280

 

17,507

 

(8,186)

 

2,282

 

(25,014)

 

7,869

Income tax (expenses)/benefits

 

(277)

 

10,838

 

7,514

 

 

18,075

Net income

21,280

 

17,230

 

2,652

 

9,796

 

(25,014)

 

25,944

Net (income)/loss attributable to noncontrolling interests

 

 

(4,667)

 

3

 

 

(4,664)

Net income/(loss) attributable to So-Young International Inc.

21,280

 

17,230

 

(2,015)

 

9,799

 

(25,014)

 

21,280

    

For the year ended December 31, 2022

    

Primary

VIEs and

Other

Beneficiary

 VIEs’

Eliminating

Consolidated

    

Parent

    

Subsidiaries

    

of VIEs

    

Subsidiaries

    

Adjustments

    

 Totals

    

RMB

    

(in thousands)

Third-party revenues from services and sales

 

5,385

 

259,784

 

992,705

 

 

1,257,874

Inter-company revenues from services and sales

 

3,742

 

251,739

 

12,203

 

(267,684)

 

Total revenues

 

9,127

 

511,523

 

1,004,908

 

(267,684)

 

1,257,874

Third-party costs from services and sales

 

(130)

 

(157,068)

 

(236,094)

 

 

(393,292)

Inter-company costs from services and sales

 

(496)

 

(12,641)

 

(253,929)

 

267,066

 

Total costs

 

(626)

 

(169,709)

 

(490,023)

 

267,066

 

(393,292)

Total operating expenses

(9,659)

 

(5,632)

 

(418,412)

 

(533,684)

 

 

(967,387)

(Loss)/Income from subsidiaries and VIEs

(55,104)

 

(69,345)

 

(22,408)

 

 

146,857

 

Other non-operating (expenses)/income

(791)

 

13,291

 

10,521

 

(7,288)

 

 

15,733

(Loss)/Income before tax

(65,554)

 

(53,185)

 

(88,485)

 

(26,087)

 

146,239

 

(87,072)

Income tax (expenses)/benefits

 

(1,919)

 

20,915

 

1,969

 

 

20,965

Net (loss)/income

(65,554)

 

(55,104)

 

(67,570)

 

(24,118)

 

146,239

 

(66,107)

Net (income)/loss attributable to noncontrolling interests

 

 

(1,775)

 

2,328

 

 

553

Net (loss)/income attributable to So-Young International Inc.

(65,554)

 

(55,104)

 

(69,345)

 

(21,790)

 

146,239

 

(65,554)

11

    

For the year ended December 31, 2021

    

    

Primary

    

VIEs and

    

Other

Beneficiary

 VIEs’

    

Eliminating

    

Consolidated

    

Parent

    

Subsidiaries

    

of VIEs

    

Subsidiaries

    

Adjustments

    

Totals

    

RMB

    

(In thousands)

Third-party revenues from services and sales

 

7,244

 

112,058

 

1,573,161

 

 

1,692,463

Inter-company revenues from service fees

 

21,744

 

584,914

 

358

 

(607,016)

 

Total revenues

 

28,988

 

696,972

 

1,573,519

 

(607,016)

 

1,692,463

Third-party costs from services and sales

 

(2,156)

 

(104,447)

 

(221,286)

 

 

(327,889)

Inter-company costs from service fees

 

 

 

(607,016)

 

607,016

 

Total costs

 

(2,156)

 

(104,447)

 

(828,302)

 

607,016

 

(327,889)

Total operating expenses

(9,556)

 

(18,517)

 

(546,861)

 

(822,210)

 

 

(1,397,144)

(Loss)/Income from subsidiaries and VIEs

(1,412)

 

(15,219)

 

(79,541)

 

 

96,172

 

Other non-operating income/(expenses)

2,597

 

8,807

 

12,318

 

(7,557)

 

 

16,165

(Loss)/Income before tax

(8,371)

 

1,903

 

(21,559)

 

(84,550)

 

96,172

 

(16,405)

Income tax (expenses)/benefits

 

(3,315)

 

5,608

 

(23,524)

 

 

(21,231)

Net (loss)/income

(8,371)

 

(1,412)

 

(15,951)

 

(108,074)

 

96,172

 

(37,636)

Net loss attributable to noncontrolling interests

 

 

732

 

28,533

 

 

29,265

Net (loss)/income attributable to So-Young International Inc.

(8,371)

 

(1,412)

 

(15,219)

 

(79,541)

 

96,172

 

(8,371)

12

Selected Condensed Consolidated Balance Sheets Information

    

As of December 31, 2023

    

Primary

VIEs and

Other

Beneficiary

VIEs’

Eliminating

Consolidated

    

Parent

    

Subsidiaries

    

of VIEs

    

Subsidiaries

    

Adjustments

    

Totals

    

RMB

    

(In thousands)

Assets

  

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents

8,228

 

84,120

 

189,736

 

144,035

 

 

426,119

Restricted cash and term deposits

 

 

65

 

14,630

 

 

14,695

Trade receivables

 

 

17,632

 

39,587

 

 

57,219

Receivables from online payment platforms

 

 

5,005

 

18,153

 

 

23,158

Amounts due from VIE companies

 

45,304

 

265,090

 

 

(310,394)

 

Amounts due from Group companies

1,647,534

 

52,422

 

18,212

 

137,937

 

(1,856,105)

 

Amount due from related parties

 

 

85

 

9,127

 

 

9,212

Term deposits and short-term investments

283,308

 

572,362

 

29,000

 

16,153

 

 

900,823

Inventories

 

 

102,925

 

15,999

 

 

118,924

Prepayment and other current assets

7,683

 

23,027

 

99,553

 

46,289

 

(4,778)

 

171,774

Investment in subsidiaries and VIEs

565,304

 

1,351,903

 

98,368

 

34,691

 

(2,050,266)

 

Long-term investments

 

3,560

 

93,000

 

164,456

 

 

261,016

Property and equipment, net

 

45

 

88,071

 

29,082

 

(416)

 

116,782

Intangible assets

 

 

117,230

 

28,023

 

 

145,253

Deferred tax assets

 

1,519

 

52,798

 

23,717

 

 

78,034

Operating lease right-of-use assets

 

 

58,950

 

59,458

 

 

118,408

Goodwill

 

 

540,009

 

684

 

 

540,693

Other non-current assets

 

59,844

 

122,661

 

49,950

 

 

232,455

Total assets

2,512,057

 

2,194,106

 

1,898,390

 

831,971

 

(4,221,959)

 

3,214,565

Liabilities

 

 

 

 

 

Short-term borrowings

29,825

29,825

Taxes payable

 

932

 

13,007

 

42,955

 

 

56,894

Contract liabilities

 

 

25,243

 

78,131

 

 

103,374

Salary and welfare payables

 

674

 

51,517

 

34,099

 

 

86,290

Amounts due to VIE companies

41,928

 

25,372

 

70,637

 

 

(137,937)

 

Amounts due to Group companies

24,856

 

1,601,314

 

91,998

 

310,394

 

(2,028,562)

 

Amounts due to related parties

 

 

301

 

87

 

 

388

Accrued expenses and other current liabilities

1,144

 

510

 

33,266

 

203,771

 

(4,778)

 

233,913

Operating lease liabilities-current

 

 

12,521

 

17,218

 

 

29,739

Operating lease liabilities-non current

 

 

44,956

 

41,254

 

 

86,210

Deferred tax liabilities

 

 

19,385

 

5,697

 

 

25,082

Other non-current liabilities

1,536

1,536

Total liabilities

67,928

 

1,628,802

 

394,192

 

733,606

 

(2,171,277)

 

653,251

Shareholders’ equity

Non-controlling interests

 

 

163,997

 

(3)

 

(46,809)

 

117,185

So-Young International Inc. shareholders’ equity

2,444,129

 

565,304

 

1,340,201

 

98,368

 

(2,003,873)

 

2,444,129

Total liabilities and shareholders’ equity

2,512,057

 

2,194,106

 

1,898,390

 

831,971

 

(4,221,959)

 

3,214,565

13

    

As of December 31, 2022

    

Primary

VIEs and

Other

Beneficiary

VIEs’

Eliminating

Consolidated

    

Parent

    

Subsidiaries

    

of VIEs

    

Subsidiaries

    

Adjustments

    

Totals

    

RMB

    

(In thousands)

Assets

  

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents

143,100

 

127,411

 

253,646

 

170,263

 

 

694,420

Restricted cash and term deposits

 

 

447

 

14,461

 

 

14,908

Trade receivables

 

 

15,538

 

20,468

 

 

36,006

Receivables from online payment platforms

 

 

3,409

 

11,378

 

 

14,787

Amounts due from VIE companies

 

15,292

 

229,112

 

 

(244,404)

 

Amounts due from Group companies

1,671,880

 

41,334

 

17,212

 

125,165

 

(1,855,591)

 

Amount due from related parties

 

 

85

 

33,297

 

 

33,382

Term deposits and short-term investments

208,938

 

647,011

 

20,006

 

 

 

875,955

Inventories

 

 

110,742

 

9,738

 

 

120,480

Prepayment and other current assets

6,826

 

18,800

 

74,980

 

36,126

 

(9,843)

 

126,889

Investment in subsidiaries and VIEs

531,693

 

1,323,281

 

84,826

 

34,691

 

(1,974,491)

 

Long-term investments

 

 

93,000

 

134,959

 

 

227,959

Property and equipment, net

 

 

92,265

 

24,407

 

(488)

 

116,184

Intangible assets

 

 

137,609

 

31,671

 

 

169,280

Deferred tax assets

 

1,613

 

37,043

 

26,083

 

 

64,739

Operating lease right-of-use assets

 

 

27,709

 

35,189

 

 

62,898

Goodwill

 

 

540,009

 

684

 

 

540,693

Other non-current assets

 

 

86,516

 

12,777

 

 

99,293

Total assets

2,562,437

 

2,174,742

 

1,824,154

 

721,357

 

(4,084,817)

 

3,197,873

Liabilities

 

 

 

 

 

Taxes payable

 

4,822

 

20,457

 

49,301

 

 

74,580

Contract liabilities

 

 

33,917

 

76,242

 

 

110,159

Salary and welfare payables

 

416

 

40,188

 

31,928

 

 

72,532

Amounts due to VIE companies

39,786

 

5,315

 

80,064

 

 

(125,165)

 

Amounts due to Group companies

23,722

 

1,632,272

 

74,432

 

244,404

 

(1,974,830)

 

Amounts due to related parties

 

 

 

5,895

 

 

5,895

Accrued expenses and other current liabilities

1,004

 

224

 

46,306

 

186,898

 

(9,843)

 

224,589

Operating lease liabilities-current

 

 

19,314

 

30,971

 

 

50,285

Operating lease liabilities-non current

 

 

9,465

 

11,507

 

 

20,972

Deferred tax liabilities

 

 

24,620

 

6,373

 

 

30,993

Total liabilities

64,512

 

1,643,049

 

348,763

 

643,519

 

(2,109,838)

 

590,005

Shareholders’ equity

Non-controlling interests

 

 

163,812

 

(6,988)

 

(46,881)

 

109,943

So-Young International Inc. shareholders’ equity

2,497,925

 

531,693

 

1,311,579

 

84,826

 

(1,928,098)

 

2,497,925

Total liabilities and shareholders’ equity

2,562,437

 

2,174,742

 

1,824,154

 

721,357

 

(4,084,817)

 

3,197,873

14

Selected Condensed Consolidated Cash Flows Information

    

For the year ended December 31, 2023

    

Primary

VIEs and

Other

Beneficiary

VIEs’

Eliminating

Consolidated

    

Parent

    

Subsidiaries

    

of VIEs

    

Subsidiaries

    

Adjustments

    

Totals

    

RMB

    

(In thousands)

Condensed Consolidating Schedules of Cash Flows

  

 

  

 

  

 

  

 

  

Inter-company receipts/(payments) related to service and sales

870

 

238,218

 

(239,088)

 

 

Other operating/administrative activities with external parties

(7,914)

18,271

 

(255,721)

 

267,865

 

 

22,501

Net cash (used in)/provided by operating activities

(7,914)

19,141

 

(17,503)

 

28,777

 

 

22,501

Purchase of short-term investments and term deposits

(491,162)

(1,219,379)

 

(493,882)

 

(31,000)

 

 

(2,235,423)

Proceeds from maturities of short-term investments and term deposits

411,184

1,252,474

 

424,435

 

15,000

 

 

2,103,093

Loans to Group companies

(178,985)

(241,488)

 

(1,950)

 

(57,680)

 

480,103

 

Repayments from Group companies

237,747

26,523

 

589

 

73,982

 

(338,841)

 

Other investing activities with external parties

(7,161)

 

(1,439)

 

(61,681)

 

 

(70,281)

Net cash used in investing activities

(21,216)

(189,031)

 

(72,247)

 

(61,379)

 

141,262

 

(202,611)

Borrowings under loan from Group companies

420,170

 

42,921

 

17,012

 

(480,103)

 

Repayments to borrowings under loan from Group companies

(285,752)

 

(42,500)

 

(10,589)

 

338,841

 

Other financing activities with external parties

(125,426)

 

25,411

 

 

 

(100,015)

Net cash (used in)/provided by financing activities

(125,426)

134,418

 

25,832

 

6,423

 

(141,262)

 

(100,015)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

19,684

(7,819)

 

 

 

 

11,865

Net decrease in cash, cash equivalents and restricted cash

(134,872)

(43,291)

 

(63,918)

 

(26,179)

 

 

(268,260)

Cash, cash equivalents and restricted cash at the beginning of the year

143,100

127,411

 

253,654

 

176,835

 

 

701,000

Cash, cash equivalents and restricted cash at the end of the year

8,228

84,120

 

189,736

 

150,656

 

 

432,740

15

    

For the year ended December 31, 2022

    

Primary

VIEs and

Other

Beneficiary

VIEs’

Eliminating

Consolidated

    

Parent

    

Subsidiaries

    

of VIEs

    

Subsidiaries

    

Adjustments

    

Totals

    

RMB

    

(In thousands)

Condensed Consolidating Schedules of Cash Flows

  

 

  

 

  

 

  

 

  

 

  

Inter-company (payments)/receipts related to service and sales

 

(25,089)

 

327,117

 

(302,028)

 

 

Other operating/administrative activities with external parties

(54,390)

 

115,125

 

(451,962)

 

278,354