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 42,103,380 in 2023, representing a growth of approximately 44.9% [103]. - Procurement revenue rose slightly to 53,186,662 in 2023, indicating a growth of about 3.1% [103]. - Management services revenue decreased to 72,282,549 in 2023, reflecting a decline of approximately 26.5% [103]. - Total revenues for the company reached 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 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 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].
SBC Medical Group Holdings Incorporated(SBC) - 2024 Q4 - Annual Report