Revenue Performance - For the three months ended March 31, 2025, the company generated revenues of $47,328,701, a decrease of 13.65% from $54,808,042 in the same period of 2024[204]. - Franchising revenue increased by 4.03% to $15,719,282 for the three months ended March 31, 2025, compared to $15,110,268 in 2024[210]. - Procurement revenue rose by 8.61% to $14,332,783 for the three months ended March 31, 2025, up from $13,195,984 in 2024[211]. - Management services revenue decreased by 44.25% to $8,728,103 for the three months ended March 31, 2025, down from $15,654,670 in 2024[212]. - Rental services revenue increased significantly by 55.90% to $5,640,514 for the three months ended March 31, 2025, compared to $3,617,941 in 2024[213]. - Other revenues decreased by 59.77% to $2,908,019 for the three months ended March 31, 2025, down from $7,229,179 in 2024[214]. Profitability - Net income attributable to SBC Medical Group Holdings Incorporated for the three months ended March 31, 2025 was $21,502,446, representing an increase of 14.63% from $18,757,752 in 2024[204]. - Gross profit for the three months ended March 31, 2025 was $37,733,084, a decrease of 4.52% from $39,519,375 in 2024[216]. - Net income increased by $2,741,734, or 14.62%, to $21,491,950 for the three months ended March 31, 2025, from $18,750,216 for the same period in 2024[225]. Expenses - Cost of revenues decreased to $9,595,617 for the three months ended March 31, 2025, from $15,288,667 in 2024, primarily due to cost reduction efforts[215]. - Operating expenses decreased by $1,527,480, or 10.14%, to $13,531,010 for the three months ended March 31, 2025, compared to $15,058,490 for the same period in 2024[217]. - Recruiting expense decreased by $512,678, or 67.72%, to $244,377 for the three months ended March 31, 2025, from $757,055 for the same period in 2024[218]. - Depreciation and amortization expense decreased by $507,299, or 52.37%, to $461,405 for the three months ended March 31, 2025, from $968,704 for the same period in 2024[219]. Cash Flow and Financial Position - Cash and cash equivalents increased by $7,011,731, or 37.30%, to $132,055,823 as of March 31, 2025, compared to $96,181,550 as of March 31, 2024[233]. - Net cash provided by operating activities decreased by $1,753,554, or 47.62%, to $1,928,621 for the three months ended March 31, 2025, from $3,682,175 for the same period in 2024[233]. - As of March 31, 2025, the company had retained earnings of $210,965,453[204]. Tax and Compliance - The effective tax rate was 31.67% for the three months ended March 31, 2025, compared to 31.07% for the same period in 2024[224]. - The company qualifies as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[252]. - The company is classified as a "smaller reporting company," which permits reduced disclosure obligations, including providing only two years of audited financial statements[254]. - The company has not experienced material changes to its critical accounting policies and estimates since the last annual report[251]. - The company has elected not to opt out of the extended transition period for new or revised financial accounting standards, aligning its compliance with private companies[253]. Future Outlook and Strategic Initiatives - The Company expects to deploy capital for investment opportunities in the expanding global medical aesthetics market[230]. - A share repurchase program with an aggregate purchase limit of up to $5 million was approved, set to begin on May 20, 2025[242]. - The revised fee structure effective April 1, 2025, aims to support the establishment of new clinics and is expected to stabilize the business foundation[239]. Liabilities and Financial Risks - As of March 31, 2025, total undiscounted lease payments amount to $5,473,817, with total lease liabilities of $5,443,973 after accounting for imputed interest[245]. - Future minimum borrowing payments total $6,864,995, with the largest repayment of $6,750,622 due in 2027[247]. - The company is exposed to foreign currency exchange rate fluctuations, primarily due to operations in Japan and revenues in Japanese yen, while reporting in U.S. dollars[249]. - There are no off-balance sheet arrangements as of March 31, 2025, indicating a straightforward financial position[248]. - The company borrowed loans from various banks and a financial institution for working capital purposes, indicating reliance on external financing[246]. - The company continues to evaluate its accounting estimates and assumptions, which could lead to actual results differing from expectations[250].

Revenue and Income - Total revenues for Q1 2025 were $47 million, a 14% year-over-year decrease due to the discontinuation of the staffing business and divestitures [4]. - Total revenues for the three months ended March 31, 2025, were $47,328,701, a decrease of 13.7% compared to $54,808,042 for the same period in 2024 [17]. - Net income attributable to SBC Medical Group increased by 15% year-over-year to $22 million, compared to $19 million in Q1 2024 [6]. - Net income attributable to SBC Medical Group Holdings Incorporated for Q1 2025 was $21,502,446, representing an increase of 14.7% from $18,757,752 in Q1 2024 [17]. EBITDA and Margins - EBITDA for Q1 2025 was $25 million, representing a 3% year-over-year decrease, with an EBITDA margin of 52%, up from 46% in Q1 2024 [4]. - EBITDA for the three months ended March 31, 2025, was $24,830,378, with an EBITDA margin of 52%, compared to an EBITDA of $25,479,362 and a margin of 46% in Q1 2024 [23]. - Operating margin improved from 45% in Q1 2024 to 51% in Q1 2025, showcasing enhanced profitability [3]. Customer Metrics - The total number of customers in the last twelve months ended March 31, 2025, was 6.1 million, reflecting a 14% year-over-year increase [4]. - The repeat customer rate for franchise clinics was 71%, indicating strong customer loyalty [4]. - The number of partner clinics increased to 251 as of March 31, 2025, an increase of 36 clinics from the previous year [4]. Cash and Assets - Cash and cash equivalents as of March 31, 2025, were $132.06 million, an increase from $125.04 million at the end of 2024 [12]. - Cash and cash equivalents at the end of the period increased to $132,055,823, up from $96,181,550 at the end of Q1 2024 [21]. - Total assets increased to $284.61 million as of March 31, 2025, compared to $266.08 million at the end of 2024 [15]. Operating Expenses and Other Income - Operating expenses decreased to $13,531,010 in Q1 2025 from $15,058,490 in Q1 2024, reflecting a reduction of 10.1% [17]. - The company reported a gain on redemption of life insurance policies amounting to $8,746,138 in Q1 2025 [17]. - Interest income increased to $55,333 in Q1 2025, compared to $17,689 in Q1 2024, marking a growth of 212.5% [17]. - The net cash provided by operating activities for Q1 2025 was $1,928,621, down from $3,682,175 in Q1 2024 [21]. - The company experienced a foreign currency translation adjustment resulting in other comprehensive income of $9,808,327 in Q1 2025, compared to a loss of $10,193,852 in Q1 2024 [17]. Share Information - The weighted average shares outstanding for basic and diluted earnings per share increased to 103,276,637 in Q1 2025 from 94,192,433 in Q1 2024 [17]. Strategic Focus - The company is focusing on strategic expansion and optimizing its profitability structure to adapt to changing market dynamics [3].

Editor's note: Seeking Alpha is proud to welcome Earnings Quality Analyst as a new contributing analyst. You can become one too! Share your best investment idea by submitting your article for review to our editors. Get published, earn money, and unlock exclusive SA Premium access.I am a professional equity analyst at a value-focused investment firm, dedicated to identifying long-term opportunities through disciplined, fundamentals-driven research. My academic background from Columbia University spans financ ...

Core Insights - SBC Medical Group Holdings has completed the purchase of 5 Bitcoin (BTC) as part of its strategic financial policy aimed at enhancing long-term corporate value and responding to macroeconomic fluctuations [1][2] - The acquisition of Bitcoin is viewed as a means to preserve asset value, particularly during inflationary periods, and to improve financial stability through diversified investments [1] - The company emphasizes adherence to asset diversification and prudent financial management within a robust risk management framework [1] Details of BTC Purchase - Purchased Cryptocurrency: Bitcoin (BTC) [2] - Purchase Amount: 5 BTC (approximately ¥60 million / US$0.4 million) [2] - Purchase Date: April 14, 2025 [2] Company Overview - SBC Medical is headquartered in Irvine, California, and Tokyo, Japan, focusing on providing management services and products to cosmetic treatment centers [3] - The company offers comprehensive management services to franchise clinics, including advertising, staff management, customer booking, housing assistance, construction, medical equipment procurement, and IT solutions [3]

Company Overview - SBC Medical Group Holdings Incorporated is a global franchise and provider of services for aesthetic clinics, headquartered in Irvine, California, and Tokyo, Japan [7] - The company focuses on providing comprehensive management services to franchisee clinics, including advertising, staff management, booking reservations, employee housing assistance, clinic construction, medical equipment procurement, and IT software solutions [7] Upcoming Event - SBC Medical has been invited to present at the Emerging Growth Conference on April 17, 2025, at 9:05 AM Eastern time for a duration of 30 minutes [1][3] - The event will allow existing shareholders and the investment community to interact with the Company's CFO, Yuya Yoshida, in real time [2][3] - Attendees can submit questions in advance or ask during the event, with the CFO aiming to address as many as possible [3] Conference Details - The Emerging Growth Conference is designed for public companies to present new products, services, and major announcements efficiently [5] - The conference will cover a wide range of growth sectors and is expected to attract tens of thousands of individual and institutional investors, as well as investment advisors and analysts [6] - All sessions will be conducted through video webcasts, and an archived version will be available for those unable to attend live [4][6]

SBC Medical, headquartered in Irvine, California and Tokyo, Japan, owns and provides management services and products to cosmetic treatment centers. The Company is primarily focused on providing comprehensive management services to franchisee clinics, including but not limited to advertising and marketing needs across various platforms (such as social media networks), staff management (such as recruitment and training), booking reservations for franchisee clinic customers, assistance with franchisee employe ...

As the aesthetic medical market continues to mature, SBC Medical is actively advancing a multi-branding strategy to address increasingly segmented consumer needs. "SBC NEO Skin Clinic" represents a strategic shift from conventional surgical aesthetic procedures to non-invasive dermatological treatments, unlocking new growth opportunities within SBC's business model. The brand is also positioned to capture demand from consumers who previously sought aesthetic treatments abroad, particularly in South Korea, b ...

SBC Medical Group Holdings (SBC) Q4 2024 Earnings Call March 28, 2025 12:56 PM ET Moderator Good morning. I'm Fukui, SBC's IR office head. It It is time to start, so we would like to start. Thank you very much for attending SBC Medical Group Holdings Financial Results Briefing despite your busy schedules. Today, we have Mr. Aikawa, the CEO and Guy, the Vice President, and will be explaining the financial results and outlook. On the right hand side, there is a QA box. So if you do have a question, please wri ...

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 $61,033,032 in 2024 from $42,103,380 in 2023, representing a growth of approximately 44.9% [103]. - Procurement revenue rose slightly to $54,814,399 in 2024 compared to $53,186,662 in 2023, indicating a growth of about 3.1% [103]. - Management services revenue decreased to $53,113,155 in 2024 from $72,282,549 in 2023, reflecting a decline of approximately 26.5% [103]. - Total revenues for the company reached $205,415,542 in 2024, up from $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 $195,173,889 for the year ended December 31, 2024, compared to $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 $409,030 for the year ended December 31, 2023, due to funds misappropriated by a former manager, totaling approximately JPY632 million ($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].

Financial Performance - Total revenues for Q4 2024 were $44 million, a 29% year-over-year decrease, while full year revenues were $205 million, representing a 6% year-over-year increase[4][6]. - Gross profit for Q4 2024 was $34 million, a 22% year-over-year decrease, and for the full year, it was $156 million, a 14% year-over-year increase[4][6]. - Net income attributable to SBC Medical Group for Q4 2024 was $7 million, a 54% year-over-year decrease, while for the full year, it was $47 million, an 18% year-over-year increase[4][6][7]. - EBITDA for Q4 2024 was $21 million, a 22% year-over-year decrease, while for the full year, it was $89 million, an 8% year-over-year increase[4][6]. - Return on equity for the full year 2024 was 28%, representing a year-over-year decrease of 4 percentage points[4]. - Total revenues for 2024 reached $205,415,542, an increase of 6.5% from $193,542,423 in 2023[31]. - Net income attributable to SBC Medical Group Holdings for 2024 was $46,614,275, up from $39,370,036 in 2023, representing an increase of 18.4%[31]. - Gross profit for 2024 was $156,050,507, compared to $137,304,038 in 2023, reflecting a growth of 13.6%[31]. - Operating expenses for 2024 totaled $85,746,797, an increase from $66,643,972 in 2023, representing a rise of 28.6%[31]. - EBITDA for the year ended December 31, 2024, was $89,162,052, an increase from $82,907,008 in 2023, resulting in an EBITDA margin of 43%[38]. Customer and Market Growth - The number of partner clinics increased to 251 as of December 31, 2024, representing an increase of 43 clinics from the previous year[4]. - The total number of customers served in the last twelve months was 6.03 million, a 15% year-over-year increase, with a repeat rate exceeding 70%[5][11]. - The company expects the aesthetic dermatology market to continue expanding in FY2025, despite anticipated intensified competition[12]. Strategic Initiatives - The company plans to revise its franchise fee structure starting in April 2025 to support long-term expansion of its franchise clinic network[12][13]. - SBC Medical acquired Aesthetic Healthcare Holdings Pte. in Singapore, establishing a strategic business hub in Asia[9]. Balance Sheet and Cash Flow - Total liabilities decreased to $71,060,996 in 2024 from $114,995,022 in 2023, a reduction of 38.3%[29]. - Stockholders' equity increased to $195,022,158 in 2024, up from $143,810,249 in 2023, marking a growth of 35.6%[29]. - Cash provided by operating activities was $20,582,933 in 2024, down from $50,670,322 in 2023, a decrease of 59.4%[34]. - The company reported a foreign currency translation adjustment loss of $16,557,607 in 2024, compared to a loss of $12,855,686 in 2023[31]. - The number of weighted average shares outstanding increased to 96,561,041 in 2024 from 94,192,433 in 2023[31]. - The company incurred an impairment loss on intangible assets of $15,058,965 in 2024, with no such loss reported in 2023[31]. - As of December 31, 2024, the net cash provided by financing activities was $22,965,400, a significant increase from $6,135,368 in 2023[36]. - The company reported a net increase in cash and cash equivalents of $22,021,160 for the year, compared to $51,284,938 in the previous year[36]. - The income from operations for the year ended December 31, 2024, was $70,303,710, slightly down from $70,660,066 in 2023[38]. - Cash paid for interest expense decreased to $28,300 in 2024 from $45,292 in 2023[36]. - The cash and cash equivalents at the end of the year increased to $125,044,092 from $103,022,932 at the beginning of the year[36]. - The company reported net cash paid for income taxes of $30,239,002 in 2024, up from $17,842,407 in 2023[36]. - Borrowings from related parties decreased to $5,481,787 in 2024 from $12,310,106 in 2023[36]. - The company recognized a deemed contribution of $1,473,571 in connection with the disposal of subsidiaries in 2024[36].