SBC Medical Group Holdings Incorporated(SBC) - 2025 Q2 - Quarterly Results

Press Release Announcement SBC Medical Group Holdings Announces Second Quarter 2025 Financial Results SBC Medical Group Holdings Incorporated announced its financial results for the second quarter and first half of fiscal year 2025, covering the three and six months ended June 30, 2025 - SBC Medical Group Holdings (NASDAQ: SBC) announced Q2 and H1 FY2025 financial results on August 13, 2025[1] Reporting Scope and Definitions Definitions and Scope for Financial Reporting The report clarifies that financial figures and customer counts include various SBC brand clinics and franchisees, while noting that EBITDA and EBITDA Margin are non-GAAP financial measures requiring reconciliation - EBITDA and EBITDA Margin are non-GAAP financial measures, with reconciliations provided in a dedicated section[2] - Financial figures take into account the franchising of SBC brand clinics, Rize Clinic, Gorilla Clinic, AHH, and JUN CLINIC[2] - Customer counts include SBC, Rize, Gorilla, and AHH clinics, but exclude JUN CLINIC and free counseling, for periods from July 1, 2024, to June 30, 2025[2] Financial and Operational Highlights Second Quarter 2025 Highlights SBC Medical Group experienced significant year-over-year financial declines in Q2 2025, with total revenues decreasing 18% and net income attributable to the company plummeting 87%, despite expanding its franchise network and increasing its customer base | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Total revenues | $43 million | $53.1 million | -18% | | Income from operations | $15 million | $27.3 million | -47% | | Net Income attributable to SBC Medical Group | $2.5 million | $18.5 million | -87% | | Earnings per share (EPS) | $0.02 | $0.20 | -90% | | EBITDA | $15 million | $28.1 million | -46% | | EBITDA margin | 35% | 53% | -18 ppts | | Return on equity | 4% | 48% | -44 ppts | - Number of Franchise Locations increased by 36 to 259 as of June 30, 2025[3] - Number of customers in the last twelve months ended June 30, 2025, increased 14% year-over-year to 6.31 million[3] First Half 2025 Highlights For the first half of fiscal year 2025, total revenues decreased 16% year-over-year to $91 million, with net income down 36% and EBITDA down 25%, attributed to strategic shifts like business discontinuation and divestitures | Metric | H1 2025 | H1 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Total revenues | $91 million | $107.9 million | -16% | | Income from operations | $39 million | $51.8 million | -25% | | Net Income attributable to SBC Medical Group | $24 million | $37.2 million | -36% | | Earnings per share (EPS) | $0.23 | $0.40 | -42.5% | | EBITDA | $40 million | $53.6 million | -25% | | EBITDA margin | 44% | 50% | -6 ppts | - Revenue decline was primarily due to the completed discontinuation of the staffing business, targeted divestitures, and revision of the fee structure[4] - Key initiatives include the acquisition of MB career lounge to enhance management support services and the joining of JUN CLINIC to the network[4] Detailed Second Quarter 2025 Financial Results Second Quarter 2025 Financial Results Overview The detailed Q2 2025 financial results confirm significant year-over-year declines in revenue, net income, and EBITDA, primarily driven by strategic business changes and unfavorable foreign exchange impacts Revenue Analysis Total revenues for Q2 2025 decreased by 18% year-over-year to $43 million, primarily due to a revised fee structure, discontinuation of staffing services, and divestiture of SNA and Kijimadaira, partially offset by growth in procurement and rental services - Total revenues were $43 million, representing an 18% year-over-year decrease[6] - The decrease was primarily due to a revised fee structure for franchising services (implemented April 2025), discontinuation of staffing services business, and divestiture of SNA and Kijimadaira[6] - The revenue decline was partially offset by growth in procurement, rental services, and other revenue streams[6] Net Income Analysis Net income attributable to SBC Medical Group for Q2 2025 significantly decreased to $2.5 million from $18.5 million in the same period of 2024, an 87% decline, largely due to unfavorable changes in other income and expenses, primarily higher foreign exchange losses | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Net Income attributable to SBC Medical Group | $2.5 million | $18.5 million | -87% | - The decrease in net income was largely attributed to unfavorable changes in other income and expenses, primarily due to higher foreign exchange losses[7] EBITDA Analysis EBITDA for Q2 2025 decreased by 46% year-over-year to $15 million, primarily driven by lower revenue following the termination of the staffing services business, the deconsolidation of SNA and Kijimadaira, and a revision of the fee structure | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | EBITDA | $15 million | $28.1 million | -46% | - The decrease in EBITDA was primarily due to lower revenue following the termination of the staffing services business, the deconsolidation of SNA and Kijimadaira, and revision of the fee structure[8] Conference Call Information Conference Call Details SBC Medical Group Holdings held a conference call on August 13, 2025, to discuss its financial results, with registration and access to presentation materials and an archived webcast available online - A conference call was held on Wednesday, August 13, 2025, at 8:30 am Eastern Time (9:30 pm Japan Time) to discuss financial results[9] - Attendees could register in advance via a provided link to access the viewing site, speaker information, and past investor relations materials[9] - Earnings presentation materials were available 10 minutes before the call, and a replay will be accessible until August 13, 2026, on the Company's Investor Relations website[10] About the Company About SBC Medical Group Holdings SBC Medical, headquartered in Irvine, California, and Tokyo, Japan, is a global owner, operator, and provider of management services and products to cosmetic treatment centers, primarily focusing on franchise clinics - SBC Medical owns and provides management services and products to cosmetic treatment centers, with headquarters in Irvine, California, and Tokyo, Japan[11] - The company primarily focuses on providing comprehensive management services to franchise clinics, including advertising, staff management, booking, facility rentals, procurement, product provision, technology licensing, IT solutions, customer rewards, and payment tools[11] Non-GAAP Measures and Forward-Looking Statements Use of Non-GAAP Financial Measures SBC Medical uses non-GAAP measures like EBITDA and EBITDA margin to evaluate operating results and for financial decision-making, acknowledging they are not U.S. GAAP defined and providing GAAP reconciliations to mitigate limitations - The Company uses non-GAAP measures, such as EBITDA and EBITDA margin, for evaluating operating results and financial and operational decision-making[12] - Non-GAAP financial measures are not defined under U.S. GAAP and should not be considered in isolation or as a substitute for GAAP measures[13] - Limitations of non-GAAP measures are mitigated by reconciling them to the most comparable U.S. GAAP performance measures[14] Forward-Looking Statements This press release contains forward-looking statements regarding future events and performance, which are inherently uncertain and subject to various risks, uncertainties, and changes in circumstances, with no commitment to publicly update or revise them except as required by law - The press release contains forward-looking statements regarding future events, performance, financial performance, growth, business prospects, and capital deployment plans[14] - These statements are inherently uncertain, outside the Company's control, and subject to various risks, uncertainties, assumptions, or changes in circumstances[14] - The Company cautions readers not to place undue reliance on forward-looking statements and does not undertake any obligation to release publicly any updates or revisions, except as required by law[14] Unaudited Consolidated Financial Statements Unaudited Consolidated Balance Sheets As of June 30, 2025, SBC Medical Group Holdings reported a significant increase in total assets to $315.3 million from $266.1 million at December 31, 2024, primarily driven by higher cash and cash equivalents and accounts receivable, while total liabilities remained relatively stable and total stockholders' equity increased substantially to $244.7 million | Balance Sheet Item | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total assets | $315,299,257 | $266,083,154 | +$49,216,103 | | Total liabilities | $70,646,686 | $71,060,996 | -$414,310 | | Total stockholders' equity | $244,652,571 | $195,022,158 | +$49,630,413 | | Cash and cash equivalents | $152,740,882 | $125,044,092 | +$27,696,790 | | Accounts receivable – related parties | $48,920,843 | $28,846,680 | +$20,074,163 | | Retained earnings | $213,423,693 | $189,463,007 | +$23,960,686 | Unaudited Consolidated Statements of Operations and Comprehensive Income For Q2 2025, total revenues decreased 18.3% year-over-year to $43.4 million, leading to an 86.5% drop in net income attributable to SBC Medical Group to $2.5 million, while H1 2025 saw total revenues decrease 16.0% to $90.7 million, with net income decreasing 35.6% to $24.0 million | Metric | Q2 2025 | Q2 2024 | YoY Change (Q2) | H1 2025 | H1 2024 | YoY Change (H1) | | :-------------------------------- | :------ | :------ | :-------------- | :------ | :------ | :-------------- | | Total revenues, net | $43,358,847 | $53,102,080 | -18.3% | $90,687,548 | $107,910,122 | -16.0% | | Gross profit | $30,010,577 | $39,419,675 | -23.8% | $67,743,661 | $78,939,050 | -14.2% | | Income from operations | $14,554,192 | $27,290,560 | -46.6% | $38,756,266 | $51,751,445 | -25.1% | | Net income attributable to SBC Medical Group Holdings Incorporated | $2,458,240 | $18,484,408 | -86.7% | $23,960,686 | $37,242,160 | -35.7% | | Basic and diluted EPS | $0.02 | $0.20 | -90.0% | $0.23 | $0.40 | -42.5% | - Foreign currency translation adjustment resulted in a gain of $8.6 million in Q2 2025, compared to a loss of $9.0 million in Q2 2024[20] Unaudited Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities was $6.4 million, a significant reversal from $22.9 million provided in the prior year, offset by a substantial increase in net cash provided by investing activities to $15.4 million, largely due to proceeds from life insurance policy redemptions, and net cash provided by financing activities of $6.9 million | Cash Flow Activity | H1 2025 | H1 2024 | Change | | :-------------------------------- | :------------ | :------------ | :----- | | Net cash provided by (used in) operating activities | $(6,411,168) | $22,874,760 | -$29,285,928 | | Net cash provided by (used in) investing activities | $15,397,998 | $(9,405,716) | +$24,803,714 | | Net cash provided by (used in) financing activities | $6,901,719 | $(109,341) | +$7,011,060 | | Net change in cash and cash equivalents | $27,696,790 | $679,838 | +$27,016,952 | | Cash and cash equivalents as of the end of the period | $152,740,882 | $103,702,770 | +$49,038,112 | - Proceeds from redemption of life insurance policies significantly contributed to investing activities, totaling $17.7 million in H1 2025[24] - The effect of exchange rate changes positively impacted cash by $11.8 million in H1 2025, reversing a negative impact of $12.7 million in H1 2024[25] Reconciliation of GAAP to Non-GAAP Financial Measures Unaudited Reconciliations of GAAP and Non-GAAP Results The reconciliation table provides a clear bridge from GAAP income from operations to non-GAAP EBITDA, showing EBITDA of $15.2 million (35% margin) for Q2 2025 and $40.0 million (44% margin) for H1 2025, both significantly lower year-over-year due to operational changes | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :------------ | :------------ | :------------ | :------------ | | Total revenues, net | $43,358,847 | $53,102,080 | $90,687,548 | $107,910,122 | | Income from operations (GAAP) | $14,554,192 | $27,290,560 | $38,756,266 | $51,751,445 | | Depreciation and amortization expense | $636,101 | $830,945 | $1,264,405 | $1,849,422 | | EBITDA (Non-GAAP) | $15,190,293 | $28,121,505 | $40,020,671 | $53,600,867 | | EBITDA margin | 35% | 53% | 44% | 50% | Investor Relations Contacts Investor Relations Contacts Contact information for investor relations is provided for both Asia, through SBC Medical Group Holdings, and the US, through ICR LLC - For investor relations in Asia, contact Hikaru Fukui, Head of Investor Relations at SBC Medical Group Holdings Incorporated (ir@sbc-holdings.com)[28] - For investor relations in the US, contact Bill Zima, Managing Partner at ICR LLC (bill.zima@icrinc.com)[28]