So-Young's Q4 Revenue Growth Masks Persistent Losses and Cash Burn Concerns

What happened

So-Young International reported unaudited Q4 2025 total revenues of RMB460.7 million, a 24.8% increase from RMB369.2 million in Q4 2024. This growth likely reflects continued clinic expansion, with centers reaching 39 by Sep-30-2025, but the DeepValue report indicates widening consolidated net losses, such as the RMB64.3 million loss in Q3 2025. Cash reserves have declined sharply from RMB1,253.2 million at Dec-31-2024 to RMB942.8 million at Sep-30-2025, driven by heavy investment in branded aesthetic centers. Governance instability persists with the CFO resignation effective Dec-31-2025, leaving the CEO as interim CFO and adding execution risk during expansion. Despite revenue growth, SY has not yet demonstrated the operating leverage or cash stabilization needed for a profit inflection.

Implication

The revenue increase confirms clinic scaling but does not mitigate the widening losses that threaten equity value and operational sustainability. Cash drawdown at this pace raises liquidity concerns and could necessitate dilution if not stabilized soon. Governance challenges from the CFO transition may impair financial discipline and delay critical capital allocation decisions. Without evidence of narrowing losses and reduced cash burn, the bull case based on operating leverage remains unproven and speculative. The WAIT rating is reinforced, with attractive entry points contingent on observable improvements in net income and cash flow metrics.

Thesis delta

The Q4 revenue growth aligns with clinic expansion expectations but does not shift the core investment thesis, which requires SY to show consolidated operating leverage and cash stabilization. Investors should await full financial details to assess if losses have narrowed and cash decline has slowed, keeping the thesis unchanged until such proofs emerge.