SBC Medical Group Holdings Inc (SBC) 2025 Q3 法說會逐字稿

Good evening. I’m Michelle Skoui, Head of IR Department. Since it is now the scheduled time, I’d like to begin today’s session.

Thank you very much for taking time out of your busy schedule to join the early briefing of SBC Medical Group Holdings. Today, we will be presenting our third-quarter financial results, business progress, and capital policy. (Operator Instructions) .

Now, I’d like to hand the presentation over to our CFO, Mr. Yoshida. Mr. Yoshida, the floor is yours.

Good afternoon. I’m Yuya Yoshida, CFO of SBC Medical Group Holdings. Thank you very much for joining our conference call today despite your busy schedules.

I will now walk you through our results for the third quarter, the progress of our business and our capital policy. Please turn on slide 5. Okay. First, regarding our franchisee clinics performance. We added the number of clinics to 258 clinics by 34 locations increase, and the annual number of customers continues to increase steadily and has now expanded to approximately 6.5 million.

Next, please. Yes. I’m going to touch upon the average spend per customer. The graph on the left shows the quarterly trend of average spend per customer. As you can see, thanks to initiatives such as pricing and promotion and strategy optimization, and our multi-brand strategy in the dermatology segment, which has successfully captured highest spending customer groups, the overall average revenue per customer visit is clearly showing signs of recovery. We intend to sustain this positive trend by accurately capturing customer needs and continuing to provide high-quality, high-satisfaction services.

Next, please. Next, financial performance for the third quarter. Our sales had been affected by restructuring and a division to franchise fees, but have since bottomed out, supported by an increase in point-related revenues.

Additionally, the decline in racing-related costs, including share-based compensation expenses, contributed to a tolerance in both operating income and net income. From here, we aim to place the company firmly back on a sustainable growth trajectory.

Next, please. Okay. Yeah. We are pleased to announce that our first step in entering into Thailand is through a partnership with BLEZ ASIA. We have entered into a consulting agreement with BLEZ ASIA Co., Ltd., a company with more than 10 years of experience and a network of over 20 pharmacies and clinics, mainly in Thailand, to provide laser treatment at affordable price. By deepening our collaboration with BLEZ ASIA, we will accelerate our full-scale entry into Thailand’s rapidly growing aesthetic medical market.

Next, please. Yes. Regarding our initiative for Waku, recently, we announced the commencement of a tender offer to acquire majority stake in Waku, which engages in R&D for regenerative medicine and skincare products with the goal of making it a subsidiary.

By combining the strengths of both companies, we aim to enhance the speed and innovation of our R&D and expand new treatments and unique service offerings in clinical areas such as AGA and orthopedics. Through this initiative, we seek to strengthen the group’s overall competitiveness and achieve sustainable growth for both companies.

Next, please. Yeah. Next, I’m going to touch upon the balance sheet. We maintain our sound and robust financial base with sufficient cash and deposits. To further accelerate growth, building strong relationships with financial institutions is essential.

Recently, we utilized bank financing for working capital purposes. Our ample liquidity will continue to be actively deployed for strategic investments, including both organic growth and M&A in Japan and overseas.

Next, please. Finally, regarding our capital policy, we recognize that the liquidity of our shares is still low, making it difficult for many institutional investors to trade. To address this, we will work on improving supply and demand and pass through measures such as new share issuance and partial shares held by the founder. This will help create a more investment-friendly environment for a broader range of investors.

That concludes my presentation. Thank you very much for your attention.

Thank you very much, Mr. Yoshida. We will now move on to the Q&A session. Here is the first question. Why was COVID elevated during Q3 2025, and when do you expect a franchise fee division impact to be fully absorbed going forward? Thank you.

Okay. First of all, the main reason why the cost increased is the increase of medical equipment lease and the effect of consolidation of AHH that we acquired in Singapore. Yeah. And yeah, we’ve seen this. Yeah. We see our financial performance bottomed out of Q3, and we see this trend will continue throughout the last year. Yeah, although there are some tweaks, but so far, we are not seeing any major negative factors. We want to keep the positive momentum that we saw in Q3 in the foreseeable future.

Thank you very much. Next question is, there are various balance sheet changes during the quarter which expected impacted cash level during Q3 2025. Could you elaborate on these changes?

Okay. Yeah. Regarding the changes in balance sheet, first of all, we are borrowing bank financing for working capital that I mentioned in the presentation. Second, we changed the payment term for the related parties in the last quarter. Third, the decrease of tax debt. We just paid our midterm income tax at the end of August. Yeah. That’s why these changes happened in the balance sheet.

Thank you very much. Next is regarding the Breath. Could you explain the expected impact of the new Breath? Also, the provide, how do you think about our SBC brand impact to the Thailand market?

Yeah. We are pleased to announce this initiative in Thailand. Yeah. Regarding the financial impact, in the near term, the impact will be not significant because we are trying some POC, proof of concept, in Thailand, yeah, by providing the laser treatment to customers, not only Japanese, but also Thai people at affordable prices. After we completed POC, we think we can expand the business into not only Thailand, but also other Asian countries such as Malaysia or Indonesia.

Thank you very much. Next is, what is your expectation for organic growth going forward for both breadth and revenue?

Again, we expect we can keep this positive momentum that we saw in Q3 because we basically completed our fee structure changes. Although, yeah, we completed our financial restrictions, somewhat the effect for the revenue and the profit of SBC Medical Group Holdings will be late a bit. I think we expect more stable financial performance in Q4 and next year.

Thank you very much. Next is regarding the Waku. Could you describe the strategic relationship behind acquiring Waqoo? Also, please show the outline of the integration roadmap for Waqoo.

Okay. Maybe, yeah, also provide mention Mr. Sakaguchi can touch upon this initiative.

ure. This is Taishi Sakaguchi. I’m Chief Planning Officer in SBC. Regarding the Waqoo, actually, it’s difficult to describe the real number about this Waqoo TOB, but we believe that synergies can be realized through strengthening the sales of Waqoo products at SBC Clinic and jointly developing pharmaceutical and medical devices and outsourcing cell culture and processing operations to Waqoo, which currently we outsource to other companies. We complete this operation within our group. After completing this TOB, we will discuss with Waqoo management in detail on this, and we will clarify the number. This is what we are considering right now. Thank you.

Basically, it’s very important to combine Waku’s R&D function and SBC’s clinics’ franchisee network. Yeah. That’s the most important thing in this initiative.

Thank you very much. Next question is for Stephen. Can you comment on the latest status of your US business development efforts?

Sure. Hi, Stephen here. I’m the Head of Global Planning Strategy and also leading SBC’s market entry into the US. The way that we’ve been thinking about the US strategy is looking at what we’ve developed in Japan, which is amazing over the last 25 years, developing into the number one medical aesthetic clinic. We have to recognize that what we’ve built there is really hard to just copy and paste and move that into the US where the market is very different.

At the moment now, we’re in a phase of really getting smart about what’s happening in the US. We’re looking for strong partners that we can work with that we can leverage a lot of the SBC learnings and strengths in Japan and that we can use in the US.

At the same time, too, we’re also looking at a lot of the cool things that are happening in terms of different treatments and technologies that are being introduced in the US and overseas that we could then potentially get first mover advantage back into Japan as well. We’re also looking at a lot of different technologies too. There’s a lot of cool things happening there.

I would say right now, we’re really looking at companies where we can develop strong partnerships. I would say initially, we’re hesitant to just kind of copy and paste and start building our clinics now, but that could be in the future. Once we start to feel more comfortable, I think we’ll start to see a lot more growth and expansion in the US.

Thank you very much. Next question is probably this is for Morisa. Can you discuss your expectation for M&A going forward?

Going forward, I think the M&A strategy is separated between domestic, which means Japanese, and a global M&A strategy. For domestic M&A strategy, I think we pursue, as we have done so far, to medical, which is in the clinic field acquisition, as we have done so far. Also, we can pursue more not only aesthetic medical industry, but also more medical clinical industry as well.

For global perspective, we are going into metal smart industry, which we are familiarized with. Also, I think we needed to study a little bit more in this industry and global perspective. We may want to invest rather than a full acquisition, especially in the US industry. I think that is the brief global strategy, I mean, M&A strategy going forward.

Thank you very much. I’ll get you back to the financial matter. What do you mean by more stable financial performance in Q4 and 2026? Does this mean a return to revenue growth? If so, could you provide any expectation for how much growth?

Yeah. Simple answer is yes. Unfortunately, at this moment, we cannot give you a concrete number of the revenue growth and the profit growth. Yes. We heard from our investors that, yeah, they need kind of a revenue guideline or profit guideline. That we are considering actively. Yeah, we are thinking of providing some financial guidance in the near future. Yeah.

Thank you very much. I’ll get you maybe to the capital matters. Regarding current liquidity situation, how do you think about how to improve the liquidity situation? Thank you.

Basically, we want to increase the free float, yeah, free float sales. So yeah, as I mentioned in the presentation, we are considering the new issues of shares or selling by our CEO-founded shares. Yeah. On top of that, we are considering the share buyback as well, yeah, that we done in this year, yes, given the weak share price. Yeah, we have to admit the current share price is too low. So we are considering the number of meetings to talk with the share price.

Thank you very much. Do you think about the dividend going forward?

Sure. Yeah. Dividend has been one of our options. We receive dividends as one of the effective ways to attract new investors, especially retail investors. On the other hand, we believe there are still many multiple growth opportunities, especially the, yeah, we see very good pipelines at the M&A, not only domestically, but also globally. Our priority is to allocate the capital with our strategic initiative.

Thank you very much. Do you have any plan to disclose financial guidance or performance guidance going forward?

Yeah. That’s what I just mentioned. We are considering that. Yeah.

Thank you very much. I’d like to wrap up this session. Mr. Yoshida, do you have any wrap-up message to the investors?

Yeah. Again, thank you for joining this conference call. Yeah. We committed to provide sufficient information to our investors. We hope our positive trend will continue in the near future. That’s it. Thank you very much.

Thank you very much. We would like to wrap up today’s earnings brief session. Thank you very much for joining.