MEDIROM Healthcare Technologies(US:MRM)2025-10-21 21:24Revenue Performance - For the six months ended June 30, 2025, total revenue was ¥3,263,371 thousand (US$22,628 thousand), representing a 12.5% increase compared to ¥2,898,297 thousand (US$20,155 thousand) for the same period in 2024[23]. - Total revenue for the six months ended June 30, 2025, was JPY 3,243,371 thousand (US$ 22,497 thousand), a decrease of 6.7% from JPY 3,475,281 thousand (US$ 24,105 thousand) in the same period in 2024[58]. - Revenue from the Relaxation Salon Segment decreased to JPY 2,902,972 thousand (US$ 20,136 thousand) from JPY 3,138,956 thousand (US$ 21,773 thousand), a decline of 7.5%[49]. - Revenue from the Digital Preventative Healthcare Segment increased by 64.7% to JPY 71,954 thousand (US$ 499 thousand) from JPY 43,694 thousand (US$ 303 thousand) in the same period in 2024[56]. - The Luxury Beauty Segment contributed ¥268,445 thousand (US$1,862 thousand), or 8.3% of total revenue for the six months ended June 30, 2025, slightly down from 8.4% in 2024[24]. Operational Metrics - The Relaxation Salon Segment accounted for 89.5% of total revenue, generating ¥2,902,972 thousand (US$20,136 thousand) for the six months ended June 30, 2025, compared to 90.3% and ¥3,138,956 thousand (US$21,773 thousand) in 2024[23]. - The number of customers served at relaxation salons reached 70,912 in July 2023, with a sales per customer of JPY6,498[38]. - The repeat customer ratio was 81.9% in November 2023, indicating strong customer retention[38]. - The operation ratio for relaxation salons was 50.5% in December 2023, reflecting operational efficiency[38]. - The company sold 11 salons in the first half of 2025, resulting in 56 salons owned by investors and under management as of June 30, 2025[42]. Financial Performance - Adjusted EBITDA for the six months ended June 30, 2025, was JPY (430,939) thousand (US$ (2,989) thousand), a decline from JPY (404,112) thousand (US$ (2,803) thousand) in 2024, resulting in an Adjusted EBITDA margin of (13.3)%[68]. - The net loss for the six months ended June 30, 2025, was JPY (690,471) thousand (US$ (4,789) thousand), compared to JPY (582,181) thousand (US$ (4,038) thousand) in 2024, representing 21.3% of total revenue[68]. - Selling, general and administrative expenses were JPY 1,189,604 thousand (US$ 8,251 thousand), representing 36.7% of total revenues, compared to 34.9% in the same period in 2024[60]. - The company recognized an impairment loss on long-lived assets of JPY 84,589 thousand (US$ 587 thousand) for the six months ended June 30, 2025[61]. - The company reported a significant impairment loss on long-lived assets of ¥84,589 for the first half of 2025, with no such loss reported in the same period of 2024[99]. Cash Flow and Liquidity - Cash and cash equivalents as of June 30, 2025, were JPY 32,663 thousand (US$ 227 thousand), raising concerns about the company's ability to meet its operating expenses[69]. - The company reported a net decrease in cash and cash equivalents of ¥296,736 thousand as of June 30, 2025, compared to an increase of ¥38,301 thousand in the prior year, indicating a substantial cash flow challenge[106]. - Net cash used in operating activities improved from ¥785,720 thousand (US$5,450 thousand) in 2024 to ¥351,912 thousand (US$2,441 thousand) in 2025[76]. - Net cash generated from financing activities increased from ¥60,789 thousand (US$422 thousand) in 2024 to ¥93,356 thousand (US$648 thousand) in 2025, attributed to increased borrowings[78]. - As of June 30, 2025, the outstanding balance of business loans was ¥1,110,365 thousand (US$7,702 thousand) with interest rates ranging from 0.20% to 2.00%[79]. Strategic Initiatives - The company plans to acquire 70% of Japan Gene Medicine Corporation, which is expected to enhance its healthcare service offerings[20]. - The company aims to maintain its status as the controlling shareholder of MEDIROM MOTHER Labs Inc. after transferring shares to third-party investors[19]. - The company plans to raise additional capital through equity or debt financing and implement cost-reduction strategies to address its financial challenges[71]. - The company underwent a reorganization on July 3, 2023, to streamline operations and focus on its Digital Preventative Healthcare business[15]. - The company implemented an organizational restructuring effective January 1, 2025, merging its subsidiaries, which had no impact on the condensed consolidated financial statements[120]. Market and Economic Conditions - The minimum wage in Tokyo increased to JPY1,113 (US$7.72) as of December 31, 2023, and is projected to rise to JPY1,163 (US$8.07) by December 31, 2024[40]. - The company updated service prices in May 2023 to address increased costs due to inflation and minimum wage hikes[41]. - The company is currently evaluating the impact of several recently issued accounting standards on its consolidated financial statements, which may affect future disclosures and reporting[124]. Segment Information - The company operates in three segments: Relaxation Salon, Digital Preventative Healthcare, and Luxury Beauty, with revenues primarily generated from customers in Japan[148][151]. - The Digital Preventative Healthcare Segment includes operations such as the government-sponsored Specific Health Guidance program and the Lav® health monitoring application, indicating a focus on health technology[112]. - The Specific Health Guidance Program saw an increase in users to 1,835 as of June 30, 2025, up from 946 in the same period in 2024[43].