MEDIROM Healthcare Technologies Inc. Announces Financial Results for Fiscal Year 2023

Core Viewpoint - Medirom Healthcare Technologies Inc. reported net profit and positive adjusted EBITDA for two consecutive years, driven by the profitability of wellness salons, sales of 30 salons, and growth in its digital wellness app, Lav [1][9]. Financial Performance - Adjusted EBITDA for 2023 was JPY 306,324 thousand (US$ 2,173 thousand), a decrease from JPY 380,464 thousand (US$ 2,700 thousand) in 2022, resulting in an adjusted EBITDA margin decline from 5.5% to 4.5% [3][9]. - Consolidated net income for 2023 was JPY 115,049 thousand (US$ 817 thousand), or 1.6% of total revenue, compared to JPY 148,945 thousand (US$ 1,057 thousand), or 2.1% of total revenue in 2022 [9][18]. Revenue Breakdown - Total revenue for 2023 was JPY 6,827,943 thousand (US$ 48,453 thousand), a decrease of JPY 126,114 thousand (US$ 895 thousand) from JPY 6,954,057 thousand (US$ 49,348 thousand) in 2022 [18]. - Revenue from the Relaxation Salon Segment increased to JPY 6,059,851 thousand (US$ 43,002 thousand) in 2023 from JPY 5,972,913 thousand (US$ 42,385 thousand) in 2022, primarily due to increased sales per customer [4][18]. - Revenue from the Digital Preventative Healthcare Segment decreased by JPY 185,986 thousand (US$ 1,320 thousand) to JPY 200,397 thousand (US$ 1,422 thousand) in 2023, attributed to delays in product development [4][18]. Cost Structure - Cost of revenues increased to JPY 5,259,075 thousand (US$ 37,320 thousand) in 2023 from JPY 5,051,600 thousand (US$ 35,847 thousand) in 2022, with the cost of revenues as a percentage of total revenues rising from 72.6% to 77.0% [5][18]. - Selling, general, and administrative expenses rose to JPY 1,960,447 thousand (US$ 13,911 thousand) in 2023 from JPY 1,805,490 thousand (US$ 12,812 thousand) in 2022, increasing as a percentage of total revenues from 26.0% to 28.7% [6][18]. Interest and Tax Expenses - Interest expense increased significantly from JPY 9,800 thousand (US$ 70 thousand) in 2022 to JPY 36,868 thousand (US$ 262 thousand) in 2023, primarily due to the full-year recognition of interest on convertible bonds issued [7][18]. - The income tax benefit for 2023 was JPY 94,427 thousand (US$ 670 thousand), compared to an income tax expense of JPY 30,809 thousand (US$ 219 thousand) in 2022, reflecting a reorganization that allowed for better utilization of loss carryforwards [8][18]. Business Development - The company launched full-scale operations of the REMONY Monitoring System in 2023 and is focused on expanding B2B sales through health data management platforms [1][4]. - Medirom operates 307 relaxation salons across Japan and has diversified into health tech with products like the MOTHER Bracelet and the Lav app, aiming to lead in healthcare data management [25].