SBC Medical Group Holdings Inc. Announces Fourth Quarter and Full Year 2024 Financial Results

     • Total revenues were $44 million, representing a 29% year-over-year decrease.

     • Gross profit was $34 million, representing a 22% year-over-year decrease.

     • Income from operations was $5 million, representing an 80% year-over-year decrease.

     • EBITDA1, which is calculated by adding depreciation and amortization expense and impairment loss to income from operations was $21 million, representing a 22% year-over-year decrease. EBITDA margin1 was 47% for the fourth quarter of 2024, compared to 43% for the fourth quarter of 2023.

     • Net income attributable to SBC Medical Group was $7 million, representing a 54% year-over-year decrease.

     • Earnings per share, which is defined as net income attributable to the Company divided by the weighted average number of outstanding shares, was $0.06 for the three months ended December 31, 2024, representing a year-over-year decrease of 58%.

     • Total revenues were $205 million, representing a 6% year-over-year increase.

     • Gross Profit was $156 million, representing a 14% year-over-year increase.

     • Income from operations was $70 million, representing a 1% year-over-year decrease.

     • EBITDA1, which is calculated by adding depreciation and amortization expense and impairment loss to income from operations was $89 million, representing an 8% year-over-year increase. EBITDA margin1 was 43% for the year of 2024, compared to 43% for the year of 2023.

     • Net Income attributable to SBC Medical Group was $47 million, representing an 18% year-over-year increase.

     • Return on equity, which is defined as net income attributable to the Company divided by the average of shareholder’s equity as of December 31, 2023, and December 31, 2024, was 28% representing a year-over-year decrease of 4 percentage points.

     • Earnings per share, which is defined as net income attributable to the Company divided by the weighted average number of outstanding shares, was $0.48 for the twelve months ended December 31, 2024, representing a year-over-year increase of 14%.

     • Number of partner clinics was 251 as of December 31, 2024, representing an increase of 43 clinics from December 31, 2023.

     • Number of customers2 in the last twelve months ended December 31, 2024, was 6.03 million, representing a 15% year-over-year increase.

     • Repeat rate for customers3 who visited franchisee’s clinics twice or more was 71 %.

Yoshiyuki Aikawa, Chairman and Chief Executive Officer of SBC Medical, said, “The year of 2024 was a momentous year for us, showcasing our solid performance and sustained growth, culminating in our successful Nasdaq listing. We delivered strong 2024 results with top line growing by 6% while bottom line surged 18% year over year. More encouragingly, supported by our extensive network of 251 clinics, we served 6.0 million loyal customers over the last twelve months, with a repeat rate exceeding 70%. As we continue to see increasing global demand for aesthetic medical services, we remain committed to developing a strong franchising structure and network, and expanding our business both domestically and internationally. Looking ahead, we remain dedicated to not only maintaining, but expanding, our competitive edge while capturing the significant growth opportunities both at home and abroad. With these goals we aim to create long-term value and drive sustainable growth for our shareholders.”

Total revenues were $205 million, an increase of 6% year-over-year despite the negative impact of the discontinuation of the staffing business, driven by the expansion of franchise clinics.

EBITDA was $89 million, an increased 8% year-over-year due to one-time factors such as stock-based compensation expenses (USD 13.0 million). However, excluding these one-time factors and foreign exchange impacts (USD 6.9 million), EBITDA increased 32% year-over-year.

Non-operating income and expenses totaled USD 3 million, primarily driven by the gain on the sale of Cellpro Japan, partially offset by an impairment loss on certain equity holdings. Consequently, net income attributable to SBC increased 18% year-over-year, achieving both revenue and profit growth compared to the previous fiscal year.

In 2024, Japan’s Ministry of Health, Labor and Welfare, the regulator of the medical industry, raised concerns regarding the expansion of aesthetic medical business, and intensified competition, which led to the shake out of some hair removal clinics. Despite such a challenging competitive environment, SBC Medical maintained its market leadership by driving market expansion through an appropriate pricing strategy for franchise clinics. As a result, the number of customers reached 6 million, a 15% year-over-year increase, while the number of unique customers4 grew 11% year-over-year to 1.9 million.

On the overseas business, SBC Medical acquired Aesthetic Healthcare Holdings Pte. and its subsidiaries (“AHH”) in Singapore, securing a strategic footprint to function as the Company’s business hub in Asia. Additionally, SBC Medical launched the “SBC Wellness” employee benefit program and entered into a strategic partnership with B4A, a SaaS company for aesthetic clinics in Japan, executing key initiatives to expand its business.

In FY2025, while the aesthetic dermatology market is expected to continue expanding, competition is also expected to intensify. To solidify its dominant market position, SBC Medical will implement strategic price revision and other initiatives.

Furthermore, to support the long-term expansion of our franchise clinic network, the Company will revise its franchise fee structure starting in April 2025. This revision aims to alleviate the initial financial burden on franchisees while introducing a tiered fee system aligned with clinic scale and the consulting services provided by SBC Medical Group Co., Ltd.

If the revised fee structure had been applied starting in April 2024, it is estimated that total revenues for fiscal year 2024 would have decreased by approximately 10%. However, the Company expects the impact on total revenues and income from operations for fiscal year 2025 to be offset by the absence of one-time losses that were recorded in fiscal year 2024, which were impairment loss on intangible assets and stock-based compensation. Nevertheless, the ultimate financial impact remains uncertain and will depend on a number of factors, many of which are beyond the Company’s control.

The Company will hold a conference call on Friday, March 28, 2025, at 8:00 am Eastern Time (or Friday, March 28, 2025, at 9:00 pm Japan Time) to discuss the financial results and take questions live.

Please register in advance of the conference using the link provided below. It will automatically direct you to the registration page of “SBC 2024 Full Year Financial Results Briefing”. Please follow the steps to enter your registration details, then click “Submit”. Upon registration, you will be able to access the dedicated Conference Call viewing site. In addition to viewing the conference call, this site provides access to information about the speakers as well as past investor relations materials.

Pre-registration is accessible online at https://edge.media-server.com/mmc/p/demkfxps/.

Starting 10 minutes before the conference call begins, you will be able to view the full-year earnings presentation materials on the site. The materials will also be available for download.

A replay of the conference call will be accessible until March 28, 2026.

Additionally, a live and archived webcast of this conference call will be available at https://ir.sbc-holdings.com/ .

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 franchise 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 franchise clinic customers, assistance with franchise employee housing rentals and facility rentals, construction and design of franchise clinics, medical equipment and medical consumables procurement (resale), the provision of cosmetic products to franchise clinics for resale to clinic customers, licensure of the use of patent-pending and non-patented medical technologies, trademark and brand use, IT software solutions (including but not limited to remote medical consultations), management of the franchise clinic’s customer rewards program (customer loyalty point program), and payment tools for the franchise clinics.

For more information, visit https://sbc-holdings.com/

The Company uses non-GAAP measures, such as EBITDA, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that the non-GAAP financial measures help identify underlying trends in its business. The Company believes that the non-GAAP financial measures provide useful information about the Company’s results of operations, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S. GAAP.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.

For more information on the non-GAAP financial measures, please see the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results.”

This press release contains forward-looking statements. Forward-looking statements are not historical facts or statements of current conditions, but instead represent only the Company’s beliefs regarding future events and performance, many of which, by their nature, are inherently uncertain and outside of the Company’s control. These forward-looking statements reflect the Company’s current views with respect to, among other things, the Company’s financial performance; growth in revenue and earnings; business prospects and opportunities; and capital deployment plans and liquidity. In some cases, forward-looking statements can be identified by the use of words such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. The Company cautions readers not to place undue reliance upon any forward-looking statements, which are current only as of the date of this release and are subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. The forward-looking statements are based on management’s current expectations and are not guarantees of future performance. The Company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. Factors that may cause actual results to differ materially from current expectations may emerge from time to time, and it is not possible for the Company to predict all of them; such factors include, among other things, changes in global, regional, or local economic, business, competitive, market and regulatory conditions, and those listed under the heading “Risk Factors” and elsewhere in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”), which are accessible on the SEC’s website at www.sec.gov.

1 EBITDA and EBITDA Margin are non-GAAP financial measures. For more information on non-GAAP financial measure, please see the section of “Use of Non-GAAP Financial Measures” and the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results.”

2 The number of customers takes into account customers of SBC brand clinics, Rize Clinic and Gorilla Clinic, but does not take account customers of AHH Clinics

3 The number of customers takes into account customers of SBC brand clinics, Rize Clinic and Gorilla Clinic, but does not take account customers of AHH Clinics, but excluding free counseling

4 The number of unique customers account for each individual customer only once, regardless of how many times they have used our clinics or franchise clinics

    As of December 31,

    2024 2023

ASSETS

Current assets:

Cash and cash equivalents $ 125,044,092 $ 103,022,932

Accounts receivable 1,413,433 1,437,077

Accounts receivable – related parties 28,846,680 33,676,672

Inventories 1,494,891 3,090,923

Finance lease receivables, current – related parties 5,992,585 6,143,564

Customer loans receivable, current 10,382,537 8,484,753

Prepaid expenses and other current assets 11,276,802 10,050,005

Total current assets 184,451,020 165,905,926

Non-current assets:

Property and equipment, net 8,771,902 13,582,017

Intangible assets, net 1,590,052 19,739,276

Long-term investments, net 3,049,972 849,434

Goodwill, net 4,613,784 3,590,791

Finance lease receivables, non-current – related parties 8,397,582 3,420,489

Operating lease right-of-use assets 5,267,056 5,919,937

Deferred tax assets 9,798,071 —

Customer loans receivable, non-current 5,023,551 6,444,025

Long-term prepayments 1,745,801 4,099,763

Long-term investments in MCs – related parties 17,820,910 19,811,555

Other assets 15,553,453 15,442,058

Total non-current assets 81,632,134 92,899,345

Total assets $ 266,083,154 $ 258,805,271

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 13,875,179 $ 26,531,944

Accounts payable – related party 659,044 —

Current portion of long-term loans 96,824 156,217

Notes payable, current – related parties 26,255 3,369,203

Advances from customers 820,898 2,074,457

Advances from customers – related parties 11,739,533 23,058,175

Income tax payable 18,705,851 8,782,930

Operating lease liabilities, current 4,341,522 3,885,812

Accrued liabilities and other current liabilities 8,103,194 21,009,009

Due to related party 2,823,590 3,583,523

Total current liabilities 61,191,890 92,451,270

    As of December 31,

    2024 2023

Non-current liabilities:

Long-term loans 6,502,682 1,062,722

Notes payable, non-current – related parties 5,334 11,948,219

Deferred tax liabilities 926,023 6,013,565

Operating lease liabilities, non-current 1,241,526 2,444,316

Other liabilities 1,193,541 1,074,930

Total non-current liabilities 9,869,106 22,543,752

Total liabilities 71,060,996 114,995,022

Stockholders’ equity:

Preferred stock ($0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding as of December 31, 2024 and 2023)** — —

Common stock ($0.0001 par value, 400,000,000 shares authorized, 103,020,816 and 94,192,433 shares issued, 102,750,816 and 94,192,433 shares outstanding as of December 31, 2024 and 2023, respectively)** 10,302 9,419

Additional paid-in capital** 62,513,923 36,879,281

Treasury stock (at cost, 270,000 and nil shares of common stock as of December 31, 2024 and 2023, respectively) (2,700,000 ) —

Retained earnings 189,463,007 142,848,732

Accumulated other comprehensive loss (54,178,075 ) (37,578,255 )

Total SBC Medical Group Holdings Incorporated stockholders’ equity 195,109,157 142,159,177

Non-controlling interests (86,999 ) 1,651,072

Total stockholders’ equity 195,022,158 143,810,249

Total liabilities and stockholders’ equity $ 266,083,154 $ 258,805,271

** Retrospectively restated for effect of reverse recapitalization on September 17, 2024.

The accompanying notes are an integral part of these consolidated financial statements.

    For the Years Ended

December 31,

    2024 2023

Revenues, net – related parties $ 195,173,889 $ 182,738,049

Revenues, net 10,241,653 10,804,374

Total revenues, net 205,415,542 193,542,423

Cost of revenues (including cost of revenues from a related party of $8,472,202 and $2,842,588 for the years ended December 31, 2024 and 2023, respectively) 49,365,035 56,238,385

Gross profit 156,050,507 137,304,038

Operating expenses:

Selling, general and administrative expenses 57,665,140 66,234,942

Stock-based compensation 13,022,692 —

Impairment loss on intangible asset 15,058,965 —

Misappropriation loss — 409,030

Total operating expenses 85,746,797 66,643,972

Income from operations 70,303,710 70,660,066

Other income (expenses):

Interest income 19,943 86,748

Interest expense (28,300 ) (45,292 )

Other income (including other income from related parties of $2,673,077 and nil for the years ended December 31, 2024 and 2023, respectively) 4,810,008 3,623,332

Other expenses (5,463,153 ) (745,519 )

Gain on disposal of subsidiary 3,813,609 —

Total other income 3,152,107 2,919,269

Income before income taxes 73,455,817 73,579,335

Income tax expense 26,765,925 35,018,729

Net income 46,689,892 38,560,606

Less: net income (loss) attributable to non-controlling interests 75,617 (809,430 )

Net income attributable to SBC Medical Group Holdings Incorporated $ 46,614,275 $ 39,370,036

Other comprehensive loss:

Foreign currency translation adjustment $ (16,557,607 ) $ (12,855,686 )

Reclassification of unrealized gain on available-for-sale debt security to net income when realized, net of tax effect of nil and $3,869 for the years ended December 31, 2024 and 2023, respectively — (8,760 )

Total comprehensive income 30,132,285 25,696,160

Less: comprehensive income (loss) attributable to non-controlling interests 117,830 (948,896 )

Comprehensive income attributable to SBC Medical Group Holdings Incorporated $ 30,014,455 $ 26,645,056

Net income per share attributable to SBC Medical Group Holdings Incorporated**

Basic and diluted $ 0.48 $ 0.42

Weighted average shares outstanding**

Basic and diluted 96,561,041 94,192,433

** Retrospectively restated for effect of reverse recapitalization on September 17, 2024.

The accompanying notes are an integral part of these consolidated financial statements.

    For the Years Ended

December 31,

    2024 2023

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 46,689,892 $ 38,560,606

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense 3,799,377 12,246,942

Non-cash lease expense 3,870,198 3,297,824

Provision for (reversal of) credit losses (402,196 ) 370,754

Stock-based compensation 13,022,692 —

Impairment loss on property and equipment — 204,026

Impairment loss on intangible asset 15,058,965 —

Impairment loss on long-term investment 529,596 —

Realized gain on short-term investments — (223,164 )

Fair value change of long-term investments 2,617,435 —

Gain on disposal of subsidiary (3,813,609 ) —

Loss (gain) on disposal of property and equipment and intangible assets 511,947 (249,532 )

Deferred income taxes (14,417,087 ) 4,113,395

Changes in operating assets and liabilities:

Accounts receivable (733,219 ) (596,069 )

Accounts receivable – related parties 1,350,413 (22,402,301 )

Inventories 1,124,805 (1,825,942 )

Finance lease receivables – related parties (5,991,486 ) 16,575,319

Customer loans receivable 18,477,327 413,867

Prepaid expenses and other current assets (2,268,209 ) 4,102,808

Long-term prepayments 1,910,274 (3,539,280 )

Other assets (1,692,642 ) (1,328,682 )

Accounts payable (9,588,067 ) 12,201,755

Accounts payable – related party 682,320 —

Notes payable – related parties (34,756,754 ) (23,816 )

Advances from customers (1,476,240 ) 461,043

Advances from customers – related parties (9,144,031 ) (4,264,184 )

Income tax payable 11,228,429 13,359,434

Operating lease liabilities (3,950,587 ) (3,158,619 )

Accrued liabilities and other current liabilities (12,096,825 ) 4,452,022

Accrued retirement compensation expense – related party — (22,082,643 )

Other liabilities 40,215 4,759

NET CASH PROVIDED BY OPERATING ACTIVITIES 20,582,933 50,670,322

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment (2,564,643 ) (8,543,351 )

Purchase of intangible assets — (1,683,030 )

Purchase of convertible note (1,700,000 ) (1,000,000 )

Prepayments for property and equipment (843,740 ) (981,567 )

Advances to related parties (622,804 ) (2,283,020 )

Payments made on behalf of a related party (5,572,564 ) —

Purchase of short-term investments — (2,106,720 )

Purchase of long-term investments (331,496 ) —

Long-term investments in MCs – related parties — (26,780 )

Cash received (paid) for acquisition of subsidiaries, net of cash acquired (4,236,009 ) 722,551

Long-term loans to others (172,411 ) (926,020 )

Repayments from related parties 6,597,564 1,912,266

Repayments from others 176,109 581,274

Proceeds from sales of short-term investments — 4,127,261

Proceeds from surrender of life insurance policies — 3,954,760

Disposal of subsidiaries, net of cash disposed of (832,416 ) —

Proceeds from disposal of property and equipment — 8,046,007

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (10,102,410 ) 1,793,631

    As of December 31,

    2024 2023

CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings from a long-term loan 6,603,253 —

Borrowings from related parties 5,481,787 12,310,106

Proceeds from reverse recapitalization, net of transaction costs 11,707,417 —

Proceeds from issuance of common stock — 10

Proceeds from exercise of stock warrants 31,374 —

Repayments of long-term loans (119,017 ) (8,730,942 )

Repayments to related parties (739,414 ) (7,707,007 )

Deemed contribution in connection with disposal of property and equipment — 9,620,453

Deemed contribution in connection with reorganization — 642,748

NET CASH PROVIDED BY FINANCING ACTIVITIES 22,965,400 6,135,368

Effect of changes in foreign currency exchange rate (11,424,763 ) (7,314,383 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 22,021,160 51,284,938

CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF THE YEAR 103,022,932 51,737,994

CASH AND CASH EQUIVALENTS AS OF THE END OF THE YEAR $ 125,044,092 $ 103,022,932

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest expense $ 28,300 $ 45,292

Net cash paid for income taxes $ 30,239,002 $ 17,842,407

NON-CASH INVESTING AND FINANCING ACTIVITIES

Property and equipment transferred from long-term prepayments $ 597,602 $ 7,681,830

An intangible asset transferred from long-term prepayments $ — $ 17,666,115

Deemed contribution in connection with disposal of subsidiaries $ 1,473,571 $ —

Settlement of loan payable to a related party in connection with disposal of property and equipment $ — $ 4,163,604

Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ — $ 2,305,199

Remeasurement of operating lease liabilities and right-of-use assets due to lease modifications $ 2,908,554 $ 2,110,079

Issuance of common stock from conversion of convertible note $ 2,700,000 $ —

Settlement of loan payable to a related party in connection with issuance of common stock $ — $ 795

Non-cash purchase consideration for an asset acquisition $ — $ 705,528

Issuance of promissory notes to related parties in connection with loan services provided $ 20,524,499 $ 15,396,709

The accompanying notes are an integral part of these consolidated financial statements.

Reconciliations of GAAP and Non-GAAP Results

    For the Three Months Ended December 31, For the Years ended December 31,

    2024 2023 2024 2023

Income from operations $ 4,717,662 $ 23,989,307 $ 70,303,710 70,660,066

Depreciation and amortization expense 931,596 2,558,302 3,799,377 12,246,942

Impairment loss 15,058,965 - 15,058,965 -

EBITDA 20,708,223 26,547,609 89,162,052 82,907,008

EBITDA margin 47 % 43 % 43 % 43 %

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In Asia:

SBC Medical Group Holdings Incorporated

Hikaru Fukui / Head of Investor Relations

E-mail: ir@sbc-holdings.com

In the US:

ICR LLC

Bill Zima / Managing Partner

Email: bill.zima@icrinc.com