Business Context and Reporting Period
This Form 20-F is a Shell Company Report filed by Youlife Group Inc. (the "Company") regarding the consummation of a business combination with Distoken Acquisition Corporation ("Distoken") on July 9, 2025. The Company, incorporated in the Cayman Islands, operates primarily through its PRC subsidiaries providing blue-collar lifetime services, including employee management, HR recruitment, and vocational education. The report covers the financial position of the combined entity as of July 9, 2025, and includes historical financial data for Youlife International Holdings Inc. for the fiscal years ended December 31, 2022, 2023, and 2024.
Key Financial Metrics
Revenue (Fiscal Year 2024): RMB 1,585.6 million (approx. US$217.2 million), representing a 16.1% increase from 2023.
Net Profit/Loss (Fiscal Year 2024): Net loss of RMB 52.4 million (approx. US$7.2 million) from continuing operations, compared to a net profit of RMB 79.3 million in 2023.
Adjusted EBITDA (Fiscal Year 2024): RMB 68.8 million (approx. US$9.4 million), an increase from RMB 59.3 million in 2023.
Cash and Cash Equivalents (Dec 31, 2024): RMB 126.5 million (approx. US$17.3 million).
Debt and Liquidity: As of December 31, 2024, total borrowings were RMB 47.4 million. The Company reported a net decrease in cash of RMB 58.9 million in 2024. Pro forma capitalization as of December 31, 2024, shows total equity of RMB 715.6 million.
Capital Structure (Post-Combination): 76,048,600 ordinary shares outstanding (64,887,792 Class A and 11,160,808 Class B) and 7,617,500 warrants.
Material Changes vs. Prior Period
- Revenue Mix Shift: Employee management services revenue grew 33.7% to RMB 1,382.6 million, becoming the dominant segment (87.2% of total revenue). Conversely, vocational education services revenue plummeted 72.1% to RMB 50.0 million due to the completion of smart campus projects and the disposal of self-operated school services.
- Discontinued Operations: The Company terminated contractual agreements with PRC Technology Entities on January 1, 2024. These operations are now classified as discontinued, removing RMB 52.2 million in revenue and associated costs from the 2023 comparative period.
- Profitability Decline: Despite revenue growth, the Company shifted from a net profit in 2023 to a net loss in 2024. This was primarily driven by a RMB 59.0 million loss from the disposal of an equity investment (Chengdu Fish Bubble) and a RMB 21.2 million fair value loss on financial assets.
- Operating Expenses: Total operating expenses decreased by 14.0% to RMB 188.6 million, largely due to a 47.1% reduction in selling and marketing expenses.
Guidance, Outlook, and Risks
Management Commentary: Management attributes the revenue growth to increased corporate customer demand for blue-collar labor and a focus on new economy industries. The shift to a net loss is attributed to non-operating items (investment losses) rather than core operational failure, as Adjusted EBITDA remained positive and grew.
Outlook: The Company expects to fund future capital expenditures and working capital requirements through existing cash balances and proceeds from the business combination. No specific quantitative guidance for future periods is provided in this filing.
Risks and Contingencies:
- Going Concern: The filing notes that the Company recorded a net loss in 2024 and had a shareholders' deficit. While the business combination provides liquidity, the Company faces substantial doubt about its ability to continue as a going concern without the successful integration and future profitability of the combined entity.
- Regulatory and Geopolitical: Risks include changes in PRC laws regarding the blue-collar service industry, geopolitical tensions (Russia-Ukraine, Israel-Hamas), and exchange rate instability.
- Customer Concentration: The top five customers accounted for 28.5% of total revenue in 2024.
- Listing Compliance: Distoken received deficiency letters from Nasdaq regarding market value of listed securities and public float requirements prior to the combination.
Investor Verification Checklist
- Verify the final closing date and share exchange ratio of the Distoken-Youlife business combination.
- Confirm the current trading status and symbol (YOUL) on Nasdaq and the OTC market for warrants (YOULW).
- Review the pro forma financial statements (Exhibit 15.1) to understand the combined entity's capitalization and debt load post-merger.
- Assess the sustainability of the "Employee Management Services" segment, which now drives nearly 90% of revenue.
- Investigate the specific details of the RMB 59 million loss on the disposal of the Chengdu Fish Bubble equity investment to determine if it is a one-time event.
- Monitor the Company's ability to maintain Nasdaq listing standards regarding market value and public float.