SoYoung (SY) Q3 2025: Aesthetic Center Revenue Soars 305% as Chain Model Achieves Scale

2025-11-17 | By EarningsIQ Research

SoYoung’s chain-driven aesthetic center business delivered a 305% surge in revenue, establishing itself as the company’s core growth engine and validating the chain model’s scalability through operational leverage and cost discipline. Legacy platform and product segments contracted sharply, underscoring a decisive business model pivot toward standardized, branded centers and vertical supply chain integration. Management’s disciplined expansion roadmap and focus on digitalization, AI, and compliance signal a bid to build durable competitive advantage as the industry shifts from marketing-led to trust-driven competition.

Summary

• Chain Model Inflection: Aesthetic center revenue now anchors the business, offsetting legacy contraction.
• Operational Leverage Surfaces: Center-level profitability and cash flow improve as scale and product focus intensify.
• Strategic Discipline Ahead: Expansion, digitalization, and compliance are prioritized to drive sustainable, trust-based growth.

Performance Analysis

SoYoung’s Q3 results mark a clear inflection, with the aesthetic center segment contributing RMB 184 million, up 305% year-over-year and 26% sequentially, now representing nearly half of total company revenue. This performance was driven by rapid center rollout—reaching 42 centers by quarter-end—and a disciplined focus on operational efficiency, with 20 centers achieving profitability and 29 generating positive operating cash flow. Cumulative active users surpassed 130,000, and verified treatment visits rose 280% year-over-year, reflecting strong underlying demand and successful customer acquisition strategies.

The legacy platform business, however, continued to shrink: information and reservation services revenue fell 34.5% year-over-year, and medical product sales declined 25%, highlighting the company’s decisive pivot to the chain clinic model. Despite robust top-line growth in the core segment, consolidated net loss widened to RMB 64.3 million, as investments in center expansion and higher sales and marketing expenses outpaced cost controls. Gross margin pressure was evident, with cost of revenues rising 43% year-over-year, mainly from the ramp-up of new clinics. Management remains confident in the chain model’s path to profitability as scale and digitalization dilute fixed costs and drive higher lifetime value from core members.

• Chain Expansion Drives Top-Line: Aesthetic center business now the primary growth engine, up 305% year-over-year.
• Legacy Segments Contract: Information, reservation, and product sales all declined, accelerating the business model transition.
• Profitability Path Emerging: Over half of mature centers profitable, but group-level loss persists due to heavy investment and legacy drag.

Customer acquisition cost (CAC) efficiency remains industry-leading, with referrals accounting for 46% of new customers and public domain channels rising 38% sequentially, supporting scalable growth at lower incremental cost.

Executive Commentary

Strategic Positioning

1. Chain Model as Core Growth Engine

SoYoung’s strategic pivot from online platform to branded, standardized aesthetic centers is now fully evident, with the chain model delivering both rapid growth and operational leverage. Management’s target of 50 centers by year-end and a long-term goal of 1,000 centers reflects a belief in scalable, repeatable processes enabled by digitalization and AI. As more centers reach maturity, profitability and cash flow are expected to improve further, validating the chain-first approach.

2. Membership System and Customer Lifetime Value

The company’s tiered membership system (levels L1–L8, with L3+ as core) is central to driving repeat business and higher annual spend—core members spend 2.5x the average user. In Q3, over 10,000 new core members were added, up 40% sequentially, contributing a high double-digit share of segment revenue. The focus on customer experience, loyalty, and word-of-mouth referrals underpins both growth and margin expansion as the user base scales.

3. Product Innovation and Supply Chain Integration

SoYoung’s blockbuster product strategy—highlighted by the launch of Miracle PLLA version 3—demonstrates vertical integration and product differentiation as key levers. The new product sold out its initial batch of 5,000 units, with 56% of users opting for the higher-priced Pro version, evidencing strong brand trust and pricing power. The company is deepening supply chain partnerships and leveraging exclusive distribution rights (e.g., BBL energy-based devices) to drive both margin and customer loyalty.

4. Compliance, Quality, and Trust-Driven Competition

Management is investing heavily in medical quality, compliance, and regulatory frameworks, with a six-level system covering everything from supervision to information security. This focus is not only a response to regulatory scrutiny but also a strategic bet that the industry is shifting from a marketing-driven to a trust-driven model. Consistent service quality, rapid crisis response, and transparent pricing are now core brand pillars.

5. Digitalization and AI as Scale Enablers

Digital tools and AI are being deployed to standardize service processes, optimize customer acquisition, and improve operational efficiency as the network scales. Management sees these investments as essential to breaking through scale bottlenecks and achieving sustainable, cost-effective growth across new and existing centers.

Key Considerations

This quarter marks a decisive transition for SoYoung, as the chain model’s operational and strategic advantages become clear and legacy drag is increasingly isolated. The company’s ability to balance rapid expansion with quality, compliance, and cash discipline will determine whether it can sustain its leadership as the industry matures.

Key Considerations:

• Chain Clinic Profitability Ramp: Over half of mature centers are profitable, but group-level losses persist due to continued expansion and legacy drag.
• Membership-Driven Revenue Concentration: Core members (L3+) drive 2.5x spend and high repeat rates, underpinning the business model’s economics.
• Product Portfolio Focus: Blockbuster products now contribute over 30% of segment revenue, with vertical supply chain integration enhancing margin potential.
• Regulatory and Quality Leadership: Investment in compliance and medical quality is both a defensive and offensive move as the competitive landscape shifts toward trust and standardization.
• Digital and AI Leverage: Technology investments are designed to sustain efficiency and quality as the network scales to 1,000 centers over time.

Risks

SoYoung faces execution risk as it scales the chain model, with group-level profitability still elusive and legacy business contraction weighing on results. Regulatory scrutiny, competitive intensity, and the need to maintain consistent service quality across a rapidly expanding network all pose material challenges. Margin improvement depends on successful digitalization, cost discipline, and further dilution of fixed costs as more centers mature.

Forward Outlook

For Q4 2025, SoYoung guided to:

• Aesthetic treatment services revenue of RMB 216–226 million, reflecting 165.8% to 178.1% year-over-year growth

For full-year 2025, management maintained its expansion and profitability targets for the aesthetic center business:

• 50 centers operational by year-end

Management emphasized continued improvement in center-level profitability and cash flow, disciplined expansion, and a focus on digitalization and cost optimization to drive sustainable growth.

• Disciplined expansion in tier-one and tier-two cities
• Ongoing investment in compliance, digital, and AI capabilities

Takeaways

SoYoung’s Q3 results confirm the chain clinic model as the new core, with operational leverage and customer loyalty now driving the business.

• Chain Model Validated: The aesthetic center business is now the primary growth and margin engine, as legacy segments fade.
• Operational Discipline Critical: Profitability at the center level is emerging, but group-level break-even will require continued cost control and digitalization.
• Watch for Execution on Scale: Investors should monitor center rollout pace, customer acquisition efficiency, and evidence of further gross margin improvement as scale builds.

Conclusion

SoYoung’s Q3 marks a pivotal transition, with the chain aesthetic center model proving scalable and operationally viable, while legacy drag persists. The company’s emphasis on compliance, product innovation, and digitalization positions it well for long-term leadership, but execution and cost discipline remain critical as it pursues aggressive expansion.

Industry Read-Through

SoYoung’s results signal a broader industry pivot in China’s medical aesthetics market from platform models to vertically integrated, branded chains emphasizing trust, quality, and compliance. The success of the chain model and blockbuster product strategy may prompt peers to accelerate investments in standardization, supply chain integration, and digitalization. As regulatory scrutiny intensifies and consumers prioritize safety and brand reputation, operators with disciplined expansion, robust quality control, and scalable digital infrastructure are likely to consolidate share and drive industry maturation.

SY Consumer Discretionary Medical Aesthetics Chain Model Digitalization Membership Compliance China