Core Viewpoint - The company has announced a share repurchase program, believing its current share price does not reflect its business performance and growth potential in the aesthetic-medical market [2][3]. Share Repurchase Program - The company will repurchase shares starting May 20, 2025, with a maximum aggregate amount of US$5 million, funded by surplus cash and future free cash flow [7]. - The repurchase will be conducted in the open market at prevailing prices, including through Rule 10b5-1 plans [2]. - The company plans to issue shares as future stock-based compensation in proportion to the number of repurchased shares [2]. Financial Strategy - The company aims to balance growth investment with shareholder returns, considering dividend distributions to enhance total shareholder return [3]. - To allocate funds for the repurchase, the company will defer further purchases under its Bitcoin purchase plan, which targeted JPY1 billion [3]. Acquisition Plans - The company is reviewing the acquisition of all shares of Risenet Co., Ltd., which provides management-support services to its clinics [4]. - The acquisition details, including price and impact on consolidated financials, are yet to be determined [4]. Company Overview - SBC Medical, headquartered in Irvine, California, and Tokyo, Japan, provides management services and products to cosmetic treatment centers, focusing on franchise clinics [5]. - Services include advertising, staff management, customer booking, facility rentals, medical equipment procurement, and IT solutions [5].

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Core Insights - SBC Medical Group Holdings has completed the purchase of 5 Bitcoin (BTC) as part of its strategic financial policy aimed at enhancing long-term corporate value and responding to macroeconomic fluctuations [1][2] - The acquisition of Bitcoin is viewed as a means to preserve asset value, particularly during inflationary periods, and to improve financial stability through diversified investments [1] - The company emphasizes adherence to asset diversification and prudent financial management within a robust risk management framework [1] Details of BTC Purchase - Purchased Cryptocurrency: Bitcoin (BTC) [2] - Purchase Amount: 5 BTC (approximately ¥60 million / US$0.4 million) [2] - Purchase Date: April 14, 2025 [2] Company Overview - SBC Medical is headquartered in Irvine, California, and Tokyo, Japan, focusing on providing management services and products to cosmetic treatment centers [3] - The company offers comprehensive management services to franchise clinics, including advertising, staff management, customer booking, housing assistance, construction, medical equipment procurement, and IT solutions [3]

Company Overview - SBC Medical Group Holdings Incorporated is a global franchise and provider of services for aesthetic clinics, headquartered in Irvine, California, and Tokyo, Japan [7] - The company focuses on providing comprehensive management services to franchisee clinics, including advertising, staff management, booking reservations, employee housing assistance, clinic construction, medical equipment procurement, and IT software solutions [7] Upcoming Event - SBC Medical has been invited to present at the Emerging Growth Conference on April 17, 2025, at 9:05 AM Eastern time for a duration of 30 minutes [1][3] - The event will allow existing shareholders and the investment community to interact with the Company's CFO, Yuya Yoshida, in real time [2][3] - Attendees can submit questions in advance or ask during the event, with the CFO aiming to address as many as possible [3] Conference Details - The Emerging Growth Conference is designed for public companies to present new products, services, and major announcements efficiently [5] - The conference will cover a wide range of growth sectors and is expected to attract tens of thousands of individual and institutional investors, as well as investment advisors and analysts [6] - All sessions will be conducted through video webcasts, and an archived version will be available for those unable to attend live [4][6]

SBC Medical, headquartered in Irvine, California and Tokyo, Japan, owns and provides management services and products to cosmetic treatment centers. The Company is primarily focused on providing comprehensive management services to franchisee clinics, including but not limited to advertising and marketing needs across various platforms (such as social media networks), staff management (such as recruitment and training), booking reservations for franchisee clinic customers, assistance with franchisee employe ...

As the aesthetic medical market continues to mature, SBC Medical is actively advancing a multi-branding strategy to address increasingly segmented consumer needs. "SBC NEO Skin Clinic" represents a strategic shift from conventional surgical aesthetic procedures to non-invasive dermatological treatments, unlocking new growth opportunities within SBC's business model. The brand is also positioned to capture demand from consumers who previously sought aesthetic treatments abroad, particularly in South Korea, b ...

SBC Medical Group Holdings (SBC) Q4 2024 Earnings Call March 28, 2025 12:56 PM ET Moderator Good morning. I'm Fukui, SBC's IR office head. It It is time to start, so we would like to start. Thank you very much for attending SBC Medical Group Holdings Financial Results Briefing despite your busy schedules. Today, we have Mr. Aikawa, the CEO and Guy, the Vice President, and will be explaining the financial results and outlook. On the right hand side, there is a QA box. So if you do have a question, please wri ...

Service Contracts and Consulting - The company entered into service contracts with Medical Corporation Association Furinkai and Junikai for operational and management consulting services, with fees of JPY 60,000,000 and JPY 1,700,000 per month respectively [54][60]. - The effective period for the service contracts with Furinkai is from September 1, 2024, to August 31, 2027, while the contract with Junikai is from September 1, 2023, to August 31, 2027 [58][61]. - The company provides consulting services focused on customer acquisition, operational efficiency, and development of new treatment methods in cosmetic dermatology [57][62]. - The company’s consulting services include training for medical facility employees and support for the implementation of business systems [58][62]. Revenue and Financial Performance - Franchising revenue increased to $61,033,032 in 2024 from $42,103,380 in 2023, representing a growth of approximately 44.9% [103]. - Procurement revenue rose slightly to $54,814,399 in 2024 compared to $53,186,662 in 2023, indicating a growth of about 3.1% [103]. - Management services revenue decreased to $53,113,155 in 2024 from $72,282,549 in 2023, reflecting a decline of approximately 26.5% [103]. - Total revenues for the company reached $205,415,542 in 2024, up from $193,542,423 in 2023, marking an increase of about 6.5% [103]. - The Company generated over 90% of its revenue from management services to Medical Corporations (MCs) under franchise agreements, totaling $195,173,889 for the year ended December 31, 2024, compared to $182,738,049 in 2023, representing an increase of approximately 6.4% [144][145]. Customer Engagement and Satisfaction - The company has developed a customer rewards program with three tiers: silver, gold, and diamond, incentivizing customer loyalty through points that can be redeemed for discounts [81]. - The franchisee clinics have an average repeat customer rate of over 71%, with a total of over 6.0 million customers globally in 2024 [105]. - The patient base at franchisee clinics increased from 3.0 million in 2021 to approximately 3.9 million in 2024, reflecting a growing demand for cosmetic procedures [112]. - The average repeat customer rate and patient satisfaction are key indicators of the company's success and brand awareness in the cosmetic medical service industry [112]. Market Expansion and New Products - The company plans to pursue a disciplined new clinic growth strategy, aiming to increase the number of franchisee clinics to enhance revenue generation [109]. - New product launches included the "Medical-sized diet" and "Shonan Beauty Dermatology" clinics, expanding the service offerings [226]. - The company is focusing on market expansion with new clinics established in various locations, including Itaewon and Shonan [226]. - The company is actively pursuing mergers and acquisitions to strengthen its market position and enhance service capabilities [226]. Technology and Innovation - The company utilizes advanced technologies, including AI and simulation technology, to enhance training and operational efficiency at franchisee clinics [87]. - The integration of advanced technologies, such as 5G/6G, allows for remote operations and consultations, improving patient safety and care [106]. - The company is exploring potential mergers and acquisitions to strengthen its product portfolio, with potential targets identified in the cosmetic surgery sector [229]. - The company is leveraging advanced technology to ensure proper procedure adherence and improve patient outcomes [233]. Compliance and Regulatory Environment - The company is subject to extensive government regulations globally, which could impact operations if licenses or permits are not obtained or retained [153]. - The company must obtain prior consent from customers before transferring sensitive personal data, such as medical records, as mandated by the APPI [162]. - The company is required to comply with the Law on Medical Examination and Treatment No. 15/2023/QH15, defining rights and obligations related to health diagnosis and treatment [191]. - The company is subject to various laws and regulations in Japan, including the Act on the Protection of Personal Information (APPI), which imposes requirements on the handling of personal data [160]. Internal Controls and Risk Management - The Company recorded a misappropriation loss of $409,030 for the year ended December 31, 2023, due to funds misappropriated by a former manager, totaling approximately JPY632 million ($5.6 million) since 2012 [146][148]. - The Company is implementing changes to strengthen internal controls, including hiring personnel with accounting experience and establishing a project to document processes and assess fraud risks [151][154]. - The Company has identified material weaknesses in its internal control environment and is taking steps to address these issues to prevent future misappropriations [150][152]. Patents and Intellectual Property - The Company holds registered patents and trademarks in Japan, with a significant number of applications filed with the International Bureau of the World Intellectual Property Organization [216]. - The Company has filed numerous trademark applications in Japan, with several notable trademarks listed [225]. - The company has pending applications for several new technologies, including "Aging Lift" and "Jade Skin Dermapen," which are expected to enhance service offerings [228]. - The company has filed multiple patent applications in Japan related to aesthetic medicine and treatment methods, specifically JP2023-136790 and JP2023-136792 [1]. Future Outlook and Strategic Initiatives - The company provided an optimistic outlook for Q4 2023, projecting revenue growth of 15% to 18% [229]. - Future guidance includes an expected EBITDA margin improvement of 5% by the end of 2024 [229]. - The company is committed to ongoing research and development to enhance treatment effectiveness and patient safety [8]. - The company aims to leverage its existing data infrastructure to support new acquisitions, enhancing overall market competitiveness [243].

Financial Performance - Total revenues for Q4 2024 were $44 million, a 29% year-over-year decrease, while full year revenues were $205 million, representing a 6% year-over-year increase[4][6]. - Gross profit for Q4 2024 was $34 million, a 22% year-over-year decrease, and for the full year, it was $156 million, a 14% year-over-year increase[4][6]. - Net income attributable to SBC Medical Group for Q4 2024 was $7 million, a 54% year-over-year decrease, while for the full year, it was $47 million, an 18% year-over-year increase[4][6][7]. - EBITDA for Q4 2024 was $21 million, a 22% year-over-year decrease, while for the full year, it was $89 million, an 8% year-over-year increase[4][6]. - Return on equity for the full year 2024 was 28%, representing a year-over-year decrease of 4 percentage points[4]. - Total revenues for 2024 reached $205,415,542, an increase of 6.5% from $193,542,423 in 2023[31]. - Net income attributable to SBC Medical Group Holdings for 2024 was $46,614,275, up from $39,370,036 in 2023, representing an increase of 18.4%[31]. - Gross profit for 2024 was $156,050,507, compared to $137,304,038 in 2023, reflecting a growth of 13.6%[31]. - Operating expenses for 2024 totaled $85,746,797, an increase from $66,643,972 in 2023, representing a rise of 28.6%[31]. - EBITDA for the year ended December 31, 2024, was $89,162,052, an increase from $82,907,008 in 2023, resulting in an EBITDA margin of 43%[38]. Customer and Market Growth - The number of partner clinics increased to 251 as of December 31, 2024, representing an increase of 43 clinics from the previous year[4]. - The total number of customers served in the last twelve months was 6.03 million, a 15% year-over-year increase, with a repeat rate exceeding 70%[5][11]. - The company expects the aesthetic dermatology market to continue expanding in FY2025, despite anticipated intensified competition[12]. Strategic Initiatives - The company plans to revise its franchise fee structure starting in April 2025 to support long-term expansion of its franchise clinic network[12][13]. - SBC Medical acquired Aesthetic Healthcare Holdings Pte. in Singapore, establishing a strategic business hub in Asia[9]. Balance Sheet and Cash Flow - Total liabilities decreased to $71,060,996 in 2024 from $114,995,022 in 2023, a reduction of 38.3%[29]. - Stockholders' equity increased to $195,022,158 in 2024, up from $143,810,249 in 2023, marking a growth of 35.6%[29]. - Cash provided by operating activities was $20,582,933 in 2024, down from $50,670,322 in 2023, a decrease of 59.4%[34]. - The company reported a foreign currency translation adjustment loss of $16,557,607 in 2024, compared to a loss of $12,855,686 in 2023[31]. - The number of weighted average shares outstanding increased to 96,561,041 in 2024 from 94,192,433 in 2023[31]. - The company incurred an impairment loss on intangible assets of $15,058,965 in 2024, with no such loss reported in 2023[31]. - As of December 31, 2024, the net cash provided by financing activities was $22,965,400, a significant increase from $6,135,368 in 2023[36]. - The company reported a net increase in cash and cash equivalents of $22,021,160 for the year, compared to $51,284,938 in the previous year[36]. - The income from operations for the year ended December 31, 2024, was $70,303,710, slightly down from $70,660,066 in 2023[38]. - Cash paid for interest expense decreased to $28,300 in 2024 from $45,292 in 2023[36]. - The cash and cash equivalents at the end of the year increased to $125,044,092 from $103,022,932 at the beginning of the year[36]. - The company reported net cash paid for income taxes of $30,239,002 in 2024, up from $17,842,407 in 2023[36]. - Borrowings from related parties decreased to $5,481,787 in 2024 from $12,310,106 in 2023[36]. - The company recognized a deemed contribution of $1,473,571 in connection with the disposal of subsidiaries in 2024[36].

Financial Performance - For the three months ended September 30, 2024, the company generated revenues of $53,084,883, a 12.28% increase from $47,278,685 in the same period of 2023[174]. - Net income attributable to SBC Medical Group Holdings Incorporated for the three months ended September 30, 2024, was $2,832,894, a decrease of 66.10% from $8,356,414 in the same period of 2023[174]. - Revenues, net for the nine months ended September 30, 2024, increased by 22.72% to $160,995,005 from $131,192,729 in 2023[196]. - Net income for the nine months ended September 30, 2024, was $40,142,008, representing an increase of $15,811,044 or 64.98% from $24,330,964 for the same period in 2023[211]. - Net income for the three months ended September 30, 2024, was $2,834,467, a decrease of $5,223,324 or 64.82% from $8,057,791 in 2023[193]. Revenue Breakdown - Royalty income increased by 82.28% to $15,688,528 for the three months ended September 30, 2024, from $8,606,999 in the same period of 2023[180]. - Procurement services revenue rose by 96.12% to $17,571,299 for the three months ended September 30, 2024, compared to $8,959,689 in the same period of 2023[181]. - Management services revenue decreased by 47.27% to $12,110,764 for the three months ended September 30, 2024, from $22,969,187 in the same period of 2023[181]. - Rental services revenue increased by 208.32% to $4,124,774 for the three months ended September 30, 2024, from $1,337,803 in the same period of 2023[182]. - Royalty income surged by $19,979,012 or 78.52% to $45,425,052 for the nine months ended September 30, 2024, attributed to changes in billing and business expansion[198]. - Procurement services revenue increased by $9,640,957 or 27.81% to $44,303,891 for the nine months ended September 30, 2024, driven by higher demand for medical materials[199]. - Management services revenue decreased to $44,471,031, down by $9,222,917 or 17.18% compared to the same period in 2023[200]. - Rental services revenue increased to $11,195,888, up by $6,514,675 or 139.17% compared to the same period in 2023[201]. Operating Expenses and Profitability - Cost of revenues decreased to $9,845,793 for the three months ended September 30, 2024, from $13,780,309 in 2023, primarily due to the discontinuation of clinic operation staff supporting services[183]. - Gross profit increased by $9,740,714 or 29.08% to $43,239,090 for the three months ended September 30, 2024, driven by higher royalty income and procurement services[184]. - Operating expenses rose to $29,404,487 for the three months ended September 30, 2024, an increase of $15,929,353 or 118.21% from $13,475,134 in 2023, mainly due to stock-based compensation and consulting fees[185]. - Gross profit increased to $122,178,140, an increase of $28,241,477 or 30.06% compared to the same period in 2023[203]. - Operating expenses increased to $56,592,092, up by $9,326,188 or 19.73% compared to the same period in 2023[204]. Cash Flow and Liquidity - The company reported cash flow provided by operating activities of $27,886,231 for the nine months ended September 30, 2024, compared to $22,753,983 for the same period in 2023[174]. - Cash and cash equivalents increased to $137,393,070 as of September 30, 2024, compared to $103,022,932 as of December 31, 2023[213]. - Net cash provided by operating activities was $27,886,231, reflecting an increase of $5,132,248 or 22.56% compared to the same period in 2023[218]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was $11,584,038, compared to $6,262,589 for the same period in 2023, primarily due to recapitalization proceeds[220]. - The company anticipates obtaining additional funds through indebtedness or equity financings to meet long-term liquidity needs[215]. Taxation - Income tax expense decreased by $2,738,878 or 21.05% to $10,273,384 for the three months ended September 30, 2024, reflecting a reduction in income before tax[191]. - The effective tax rate increased to 78.38% for the three months ended September 30, 2024, from 61.76% in 2023, primarily due to stock-based compensation recognition[192]. - The effective tax rate decreased to 40.44% from 51.35% for the nine months ended September 30, 2024, mainly due to an increase in deductible enterprise tax[210]. Corporate Developments - The company plans to expand its "Shonan Beauty Clinic" brand in Japan, Vietnam, and the United States, aiming for global growth[175]. - The company has entered into an agreement to acquire 100% equity interest of Aesthetic Healthcare Holdings for approximately SGD$7.8 million (approximately US$6.0 million) as of November 12, 2024[221]. - The company has restated its previously reported consolidated balance sheets and statements of operations for the years ended December 31, 2022, and 2021, due to the misappropriations[224]. - Misappropriations of funds amounted to approximately JPY632 million ($5.6 million), with the former director receiving approximately JPY335 million ($3.0 million) between April 2016 and January 2024[222]. Accounting and Reporting - The company generates revenue from various sources, including franchising, procurement, management services, and rental services, with specific revenue recognition policies under ASC Topics 606 and 842[231][242]. - The company accounts for stock-based compensation awards in accordance with ASC Topic 718, recognizing costs based on estimated fair value on the grant date and amortizing over the requisite service period[249]. - The fair value of warrants is determined using the binomial option pricing model, with significant estimates related to forecasted revenues and cash flows[250]. - The company qualifies as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements, including auditor attestation requirements[251]. - The company has elected not to opt out of the extended transition period under the JOBS Act, allowing it to adopt new or revised financial accounting standards at the same time as private companies[252]. - The company is classified as a "smaller reporting company," which allows it to provide only two years of audited financial statements[253]. - The market value of the company's common stock held by non-affiliates must exceed $250 million or annual revenue must exceed $100 million for it to cease being a smaller reporting company[253]. - The company is not required to provide quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[254]. Foreign Exchange and Risk Exposure - The unfavorable impacts of foreign exchange rate changes on net revenues were $2,570,776 for the three months ended September 30, 2024[179]. - The company is exposed to foreign currency exchange rate fluctuations, primarily due to operations in Japan and revenues denominated in Japanese yen[228].