So-Young International Inc. Q1 FY2026 earnings call

- Aesthetic Center Chain Expansion: As of the call, Soyang Clinic expanded to 17 cities with 59 total centers, a net addition of 10 centers compared to year-end 2025, ranking first in the Chinese medical aesthetic chain market by center count, treatment volume, and user base. In Q1 2026, verified treatment visits exceeded 148,000 (up 172% year-over-year), and total verified treatments reached over 325,000 (up 164% year-over-year). Active users surpassed 210,000 by March end, with over 63,000 Level 3 and above core members. 52% of new customers came from user referrals, and customer acquisition cost remained well controlled. The company ran successful marketing campaigns including Disney co-branded pop-ups for the Miracle Collagen line and celebrity endorsements. Standardized operations accelerated new center ramp-up and improved per-center efficiency. Blockbuster product revenue accounted for 41% of total segment revenue in Q1. - Medical Delivery and Operational Infrastructure: The company strengthened medical core competitiveness by expanding its full-time physician team to ~230 members (up 9% from year-end 2025, maintaining industry leadership). In Q1 2026, it launched the Medical R&D and Training Center and National Command and Control Center: the R&D center operates specialized labs to evaluate all market products and devices for safety, efficacy, and develops standardized SOPs; the training center requires mandatory closed systematic training and assessment for all new physicians before practice; the Command and Control Center enables real-time remote compliance monitoring, emergency response, user feedback handling, and national operational data tracking to ensure medical safety and service consistency. - Supply Chain and Product Development: Soyang maintains a diversified Green Label supply chain system focused on compliance, traceability, and price transparency. In April 2026, it announced a strategic cooperation with Jingbo Biomaterials, gaining exclusive rights to the new WeYinMei Compact product and launching the Miracle Collagen anti-aging line, which is the 20th Green Label product. The company also launched new enhanced products to address sensitive skin issues and upgraded existing offerings, further enriching its product portfolio. Direct upstream collaboration and reverse customization improve supply chain efficiency and better meet user needs.

Total Q1 2026 revenue was 432.8 million RMB, growing 45.6% year-over-year. 1. Aesthetic Treatment Service (Branded Aesthetic Center) segment: Revenue reached 282.4 million RMB, up 185.8% year-over-year, accounting for over 65% of total company revenue. Gross margin expanded 8.4 percentage points year-over-year and 3.3 percentage points quarter-over-quarter. As of March 31, 2026, the company operated 54 Soyang Clinics (net addition of 5 in the quarter). 20 mature centers generated 150 million RMB in revenue (~7.5 million RMB per center); 23 growth centers contributed 109.5 million RMB (~4.8 million RMB per center); 11 ramp-up centers contributed 22.9 million RMB (~2.1 million RMB per center). 41 centers were profitable, and 48 generated positive operating cash flow (net addition of 16 profitable centers and 9 positive cash flow centers quarter-over-quarter). 2. Information and Reservation Services segment: Revenue was 8.3 million RMB, down 30% year-over-year. 3. Medical Products Sales and Maintenance Services segment: Revenue was 57.1 million RMB, up 2.8% year-over-year, driven by increased medical product order volume. 4. Other Services segment: Revenue was 12.9 million RMB, down 39.3% year-over-year, due to lower insurance brokerage revenue.

- For Q2 2026, management expects aesthetic treatment service revenue to be between 307 million RMB and 317 million RMB, representing year-over-year growth of 112.6% to 119.5%. - For full-year 2026, management will continue advancing key initiatives across supply chain optimization, medical delivery excellence, and operational efficiency to strengthen market leadership, drive sustainable growth, and build a clear path to profitability. - Long-term, the company remains committed to its 1,000 centers expansion goal, and will maintain a measured expansion pace while optimizing operating and financial performance to create long-term value for users and shareholders.

No explicit material risks or operational failures were discussed during the earnings call. Management only noted that industry competition will remain intense in 2026, and weaker market participants will continue to exit the market.

Q: Given the recent industry trend of slowing overall growth and intensifying competition in China's medical aesthetics market, what are current industry development status, consumer characteristics, and future market opportunities for Soyang? / A: Management stated that while broad market growth has slowed, large structural opportunities remain. As of 2025, China's medical aesthetics market exceeded 317 billion RMB, with light medical aesthetics capturing 80% of the market (overtaking surgery as the mainstream) and holding leading global growth potential. Key consumer shifts include a focus on anti-aging rather than full appearance changes, more rational purchasing (willing to pay for technology but not unsubstantiated marketing hype), and rising penetration across second and third-tier cities matching first-tier demand. Upstream product approvals are accelerating, giving Soyang more sourcing options and better procurement costs. Management projects the market will exceed 600 billion RMB by 2030, with the biggest opportunity in scaled standardized chain services, which Soyang is well positioned to capture.

Q: With high repeat rates and strong stickiness among core members, is there still upside to annual high-value user spending, and what blockbuster products should be expected? / A: Management confirmed there is clear upside to growing LTV and ARPU, and will pursue growth through two key avenues. First, it will offer differentiated rights and personalized services for L3+ core members to meet diverse needs and increase lifetime value. Second, it will continue expanding mid-to-high-end offerings and promote bundled complementary treatment solutions to lift ARPU. Existing popular blockbusters like Thermage and BBL already drive strong ARPU growth, and new products including the Zinbo Biopharmaceutical collagen line and skin booster series have shown strong early sales momentum and will be key growth drivers going forward.

Q: Can you elaborate on your high-quality physician talent reserve and unique mechanisms for retaining professional medical talent? / A: Management noted that talent development is central to its medical delivery quality, and currently has 230 full-time physicians, all of whom must complete rigorous systematic training and pass assessments before practicing, supported by the new Beijing training and R&D center. Retention is supported by a multi-layer mechanism: competitive performance commissions linked to treatment volume, clear career progression paths from in-clinic physician to regional and master physician, customized training for senior physicians through partnerships with top upstream brands like Allergan, brand visibility opportunities, and equity incentives for core employees that align personal and company growth. Physician turnover is in line with the industry average.

Q: What innovations have you introduced to the traditional clinical service model, and how have physician and consultant roles changed? / A: Management is innovating through two core changes. First, it is standardizing diagnosis and treatment: working with experts to categorize user skin types by underlying conditions to build standardized treatment guides, and integrating big data and AI into skin detectors to enable automated treatment recommendations, which will improve operational efficiency. Second, it is rolling out a physician-led first consultation model, where physicians lead the initial customer consultation, and consultants shift to a supporting role. This adjustment highlights the medical nature of services, strengthens user trust, and is expected to improve conversion. The model is already live in selected clinics, with a plan to reach 100% coverage for new customers and expand to returning customers over time.