Soyoung Technology Files for Nasdaq IPO Under Ticker 'SY'

VCBeat (WeChat: vcbeat) has learned that in the early hours of April 9 (Beijing time), Beijing New Oxygen Technology Co., Ltd. (hereinafter referred to as “New Oxygen Technology” or “New Oxygen”) filed a prospectus with the U.S. Securities and Exchange Commission (SEC), planning to list on the NASDAQ under the ticker symbol SY.

New Oxygen Technology’s underwriters for this offering are Deutsche Bank and CICC; however, the company has not yet disclosed information such as the number of shares to be issued or the indicative price range in its prospectus.

As the leading internet-based medical aesthetics service platform, So-Young Technology’s prospectus reveals that the company achieved leapfrog growth in its revenue scale over the past three years. Its total revenue surged from RMB 49 million in 2016 to RMB 259 million in 2017, representing a year-on-year growth rate of 428%. In 2018, total revenue further increased by 138% to RMB 617 million (approximately USD 89.8 million).

New Oxygen Technology also delivered outstanding performance in terms of net profit. As a startup internet medical aesthetics service platform established less than six years ago, New Oxygen Technology achieved a net profit of RMB 55.08 million in 2018, representing a substantial year-on-year increase of 220%.

Behind the impressive performance lies New Oxygen Technology’s rapid achievement of scale in a short period, successfully leveraging high-quality content as a bridge to convert its user base into actual profits.

As of the end of 2018, New Oxygen had not only become a leading online one-stop medical aesthetics service platform in China, but was also highly popular, helping its users discover, evaluate, and book medical aesthetics services.

Currently, SoYoung’s business covers more than 300 cities across China, attracting nearly 4,000 certified medical aesthetic institutions for users to choose from, primarily including hospitals, outpatient departments, and clinics. In addition, SoYoung covers a total of nearly 6,000 consumer healthcare institutions, including dental care providers.

On the other hand, SoYoung’s “secret weapon” for boosting user stickiness, Beauty Diary, is updated daily and features over 2 million case-based posts.

The medical aesthetics services industry, fueled by the “appearance economy,” may be poised for a new round of explosive growth, following the listing of this leading internet-based medical aesthetics service platform.

Traffic is crucial for any startup with an internet DNA, and precise, active traffic is even more critical. According to So-Young’s prospectus, in the fourth quarter of 2018, So-Young’s rich media content disseminated through social media networks and specific media platforms garnered an average of over 240 million views per month.

In terms of user engagement, according to Frost & Sullivan’s research, in 2018, the SoYoung mobile app accounted for 84.1% of the total daily time spent by users on mobile apps for online medical aesthetic services. Moreover, in 2018 alone, the total gross merchandise value (GMV) of medical aesthetic service transactions facilitated through the SoYoung platform reached RMB 2.1 billion, representing 33.1% of the total GMV of online appointment-based medical aesthetic services that year.

It is evident that the New Oxygen platform not only leads the industry in traffic volume but also achieves exceptionally high actual conversion efficiency among its users. This is likely closely tied to New Oxygen’s initial strategy of targeting the most widely sought-after minimally invasive aesthetic procedures and physician-founded clinics that rely heavily on platform-driven patient referrals, while continuously deepening and solidifying its presence in this niche segment.

Jin Xing, founder and CEO of So-Young, stated in a media interview that comprehensive e-commerce platforms such as Taobao and JD.com possess absolute traffic advantages and hundreds of millions of users. Their strategy focuses on continuously expanding product categories and pursuing traffic conversion rates, emphasizing breadth. In contrast, given the higher decision-making threshold for medical aesthetic consumption, So-Young prioritizes the depth of service provided to each individual user.

Precise traffic is only the first step; SoYoung has its own business philosophy on how to convert traffic into actual revenue.

Compared with traditional, essential medical services, aesthetic medicine falls under the category of discretionary healthcare; therefore, aesthetic clinics consistently rely on marketing to acquire customers. In China’s medical aesthetics market, customer acquisition costs are generally high. According to seasoned industry practitioners, the average offline customer acquisition cost for aesthetic clinics stands at RMB 6,000 per person, while medical aesthetics institutions have historically allocated 40% or even more of their marketing budgets to channel partners.

Profits are distributed across various customer acquisition channels, thereby diluting the profit margins of medical aesthetic institutions; these costs are ultimately passed on to consumers. SoYoung, on one hand, leverages its base of precise target users as a foothold to attract resources from plastic surgery hospitals and surgeons, reducing their customer acquisition costs. On the other hand, it provides consultation and online appointment services to medical aesthetic consumers, which not only reduces information asymmetry but also addresses the aforementioned profitability pain points in the industry, enhances industrial transparency, and enables both clients and consumers to benefit.

In its prospectus, New Oxygen stated that, according to third-party research feedback, its platform’s highly active user base enables it to deliver higher customer acquisition efficiency for medical aesthetic service providers compared to other online channels.

“For consumers, we help them find accredited and legally compliant hospitals on one hand, and on the other, we offer products such as Aesthetic Medicine Diaries and the Aesthetic Medicine Encyclopedia, enabling consumers to do their homework and make informed choices before visiting aesthetic medicine institutions, rather than having consultants solely drive the promotion of products and equipment as was common in the past.” This is how Jin Xing described practical ways to optimize consumer experience during a Deloitte interview in June 2018.

It is reported that, regarding information on medical aesthetic and plastic surgery institutions, New Oxygen has uploaded extensive data—including business licenses, procedural case studies, offered services, and pricing—to create a transparent information repository. In terms of its team, New Oxygen is continuously increasing the proportion of staff with medical backgrounds to oversee community content, verify the qualifications of doctors and hospitals, and ensure that products such as injectables and implants are registered with Chinese authorities and carry original manufacturer certification.

To address the challenge faced by aesthetic medicine consumers in selecting doctors and clinics, SoYoung innovatively introduced the "Aesthetic Medicine Diary" feature. Currently, SoYoung hosts over 2 million user-generated Aesthetic Medicine Diaries featuring real patients. These diaries not only display a series of before-and-after photos but also provide details on the specific treatment procedures, dates, physicians, and hospitals. Aggregated together, these diaries have become SoYoung’s “unique secret weapon” for maintaining user stickiness.

Hong Deshang, a partner at Lanxin Asia, stated: “Driven by consumption upgrades and the rise of the ‘beauty economy,’ the medical aesthetics industry has experienced rapid growth in recent years. The extensive repository of ‘Beauty Diaries’ accumulated by So-Young has helped consumers make informed purchasing decisions and promoted greater transparency and marketization within the industry. As an industry leader, So-Young has achieved robust growth and delivers a superior user experience. The company provides high-quality services and content, establishing significant competitive barriers.”

However, as competitive pressures intensify and medical aesthetics O2O platforms are required to continuously innovate their business models, New Oxygen is also exploring more diversified commercial strategies. These include integrating live streaming, engaging industry key opinion leaders (KOLs), and leveraging the influencer economy, thereby consistently enhancing user stickiness.

Currently, New Oxygen’s new media matrix has established a presence across multiple WeChat official accounts and short-video platforms, covering the fields of plastic surgery, beauty, aesthetics, skincare, fashion, fitness, film and television, celebrities, and influencers.

In each month of the fourth quarter of 2018, SoYoung’s monthly total views for social media content on third-party platforms exceeded 240 million.

Multiple professional research reports indicate that China's medical aesthetics service industry is vast in scale and growing rapidly, with high-speed growth expected to continue over the next five years.

According to Frost & Sullivan data, the total revenue of the medical aesthetics services industry reached RMB 121.7 billion in 2018, with a compound annual growth rate (CAGR) of 23.6% from 2014 to 2018. The industry’s revenue is projected to reach RMB 360.1 billion by 2023, with the CAGR further increasing to 24.2% from 2018 to 2023.

Driven by rapid industry growth, China has become one of the fastest-growing medical aesthetics service markets globally. In 2017, it ranked second worldwide in terms of market size and is projected to become the largest medical aesthetics service market globally by 2021.

As the market size of medical aesthetics services expands, the proportion of customer acquisition spending by medical aesthetics service providers through online medical aesthetics platforms out of their total online channel customer acquisition spending increased from 0.9% in 2014 to 7.0% in 2018, and is projected to reach 25.6% in 2023. Furthermore, total customer acquisition spending is expected to grow from RMB 1.3 billion in 2018 to RMB 12.6 billion in 2023, representing a compound annual growth rate (CAGR) of 58.2%.

This means that New Oxygen will remain at the forefront of the industry's explosive growth for at least the next five years.

Furthermore, the “Healthy China” strategy’s support for private healthcare provision and the opening up of multi-site practice for physicians indicate that policy dividends for consumer healthcare are being continuously released. The dual tailwinds of demand and favorable policies are ushering the consumer healthcare industry into a golden period of development.

As regulatory oversight intensifies and capital investment accelerates, the medical aesthetics industry is gradually entering a phase of consolidation. For leading players like New Oxygen, this presents an opportunity to leverage their financial and scale advantages to accelerate industry expansion and secure a dominant market position.

In its prospectus, New Oxygen stated that, going forward, the company will continue to focus on enhancing the credibility, transparency, and professionalism of platform information and services; proactively deploy artificial intelligence and other innovative technologies; continuously strengthen brand awareness and broaden user acquisition channels; and expand into other consumer healthcare sectors to reach new user groups.