Financial Performance - For the three months ended September 30, 2025, the company generated revenues of $43,353,235, a decrease of 18.33% from $53,084,883 in the same period of 2024[227]. - Net income attributable to SBC Medical Group Holdings for the three months ended September 30, 2025, was $12,824,636, compared to $2,832,894 in 2024, reflecting a significant increase of 352.70%[230]. - Revenues, net for the nine months ended September 30, 2025 decreased by 16.74% to $134,040,783 from $160,995,005 in the same period of 2024[254]. - Net income for the three months ended September 30, 2025 was $12,833,326, representing an increase of $9,998,859 or 352.76% from $2,834,467 in the same period of 2024[250]. - Net income for the nine months ended September 30, 2025 was $36,765,128, representing a decrease of $3,376,880 or 8.41% from $40,142,008 in the same period of 2024[270]. Revenue Breakdown - Franchising revenue decreased by 36.71% to $9,929,387 for the three months ended September 30, 2025, from $15,688,528 in 2024, primarily due to a revision of the fee structure[235]. - Procurement revenue fell by 23.70% to $13,406,905 for the three months ended September 30, 2025, from $17,571,299 in 2024, attributed to reduced orders from medical corporations[236]. - Management services revenue decreased by 21.87% to $9,462,183 for the three months ended September 30, 2025, from $12,110,764 in 2024, mainly due to the discontinuation of certain supporting services[237]. - Franchising revenue decreased to $35,656,250, down by $9,768,802 or 21.51% from $45,425,052 for the same period in 2024[256]. - Procurement revenue decreased to $43,496,207, down by $807,684 or 1.82% from $44,303,891 for the same period in 2024[257]. - Management services revenue decreased to $23,328,864, down by $21,142,167 or 47.54% from $44,471,031 in the same period of 2024, primarily due to the merger of Shobikai Sub and the discontinuation of certain services[258]. Cash Flow and Expenses - The company reported cash flows used in operating activities of $(27,295,426) for the nine months ended September 30, 2025, compared to cash flows provided of $27,886,231 in 2024[227]. - Operating expenses decreased to $14,730,247, down by $14,674,240 or 49.90% from $29,404,487 in the same period in 2024[243]. - Gross profit decreased to $30,611,487, down by $12,627,603 or 29.20% from $43,239,090 in the same period of 2024[242]. - Gross profit for the nine months ended September 30, 2025 was $98,355,148, a decrease of $23,822,992 or 19.50% from $122,178,140 in the same period of 2024, mainly due to lower franchising and management services revenue[262]. - Operating expenses decreased to $43,717,642, down by $12,874,450 or 22.75% from $56,592,092 in the same period of 2024, primarily due to reduced stock-based compensation and salaries[263]. Other Income and Tax Rate - Other income increased to $2,526,035 for the three months ended September 30, 2025, compared to $65,922 for the same period in 2024, a rise of 3,731.85%[247]. - The effective tax rate decreased to 30.66% from 78.38% for the three months ended September 30, 2025, a decrease of 47.72 percentage points[249]. - The effective tax rate was 42.10% for the nine months ended September 30, 2025, compared to 40.44% for the same period in 2024[269]. Company Strategy and Future Plans - The company aims to expand its "Shonan Beauty Clinic" brand and strengthen its market position in Japan, Vietnam, and Singapore[228]. - The Company plans to conduct a tender offer for up to 575,000 shares of Waqoo's common stock from November 14, 2025, to December 12, 2025[291]. - The Company intends to make Waqoo its consolidated subsidiary following the completion of the tender offer, aiming to enhance R&D initiatives and integrate advanced technologies[287]. Financial Position and Assets - As of September 30, 2025, the company had retained earnings of $226,248,329[227]. - As of September 30, 2025, the company had $127,431,318 in cash and cash equivalents, compared to $125,044,092 as of December 31, 2024[272]. - The Company holds significant operating and finance leases, with total undiscounted lease payments amounting to $5,155,215[289]. - Future minimum borrowing payments total $21,122,794, with significant repayments due in 2026 and 2027[292]. Market and Currency Exposure - The Company is exposed to foreign currency exchange rate fluctuations, primarily due to operations in Japan and revenues in Japanese yen[294]. - The average exchange rate of Japanese Yen against the U.S. dollar was 147.4096 for the three months ended September 30, 2025, compared to 148.9730 in 2024, impacting net revenues positively[234]. Corporate Structure - The company completed a business combination with Pono Capital Two, Inc. on September 17, 2024, and began trading on Nasdaq under the ticker symbol "SBC"[219]. - The Company is classified as an "emerging growth company," allowing it to take advantage of certain reporting exemptions[297].
SBC Medical Group Holdings Incorporated(SBC) - 2025 Q3 - Quarterly Report