SBC Medical Group Holdings Incorporated (“SBC Medical”, or the
“Company”), a global owner, operator and provider of management
services and products to cosmetic treatment centers, today
announced its unaudited financial results for the third quarter
ended September 30, 2024.
Third Quarter 2024 Highlights
- Total revenues for the three months ended September 30,
2024 were $53 million, representing an increase of 12% from $47
million in the same quarter of 2023.
- Total revenues for the nine months ended September 30,
2024 was $160 million, representing an increase of 23% from $131
million in the same period of 2023.
- Income from operations for the three months ended
September 30, 2024 was $13 million, representing a decrease by 31%
from the same quarter in 2023.
- This result was impacted by $12.8 million of stock-based
compensation expense related to the Company’s listing process.
- Income from operations for the nine months ended
September 30, 2024 was $65.5 million, representing an increase of
40.5% from the same period in 2023.
- This result is impacted by $12.8 million of stock based
compensation expense related to the Company’s listing process.
- EBITDA1, which is calculated by adding depreciation and
amortization expense to income from operations, for the nine months
ended September 30, 2024 was $68 million, representing an increase
of 21% from the same period in 2023. EBITDA margin was 42%
for the nine months ended September 30, 2024
- Net income attributable to SBC Medical Group Holdings
Incorporated for the three months ended September 30, 2024 was
$2 million, compared to $8 million in the same quarter of
2023.
- Net income attributable to SBC Medical Group Holdings
Incorporated for the nine months ended September 30, 2024 was
$40 million, an increase of 60% from $25 million in the same period
of 2023.
- Number of partner clinics was 224 as of September 30,
2024, representing an increase by 24 from September 30, 2023.
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.”
- Number of customers in the last twelve months was 4.3
million, representing an year-over-year increase of 13.5%.
- Return on equity (annualized), which is defined as
annualized net income attributable to the Company divided by the
average of shareholder’s equity as of December 31, 2023 and
September 30, 2024, was 31% for the nine months ended September 30,
2024, representing a year-over-year increase of one percentage
points.
- Earnings per share (basic), which is defined as net
income attributable to the Company divided by weighted average
number of outstanding shares, was $0.42 for the nine months ended
September 30, 2024, representing a year-over-year increase of
56%.
“Our first earnings release as a publicly listed company marks a
significant milestone for SBC Medical. After completing a
successful business combination with Pono Capital Two, SBC Medical
began trading on Nasdaq under the ticker symbol ‘SBC’ on September
18, 2024.” said Yoshiyuki Aikawa, Chairman and Chief Executive
Officer of SBC Medical. “This quarter’s strong results, with total
revenue reaching USD161 million—an impressive 23% increase
year-over-year—and a net income rise of 59%, highlight the positive
impact of our strategic initiatives such as restructuring royalty
fees and expanding our clinic network. Additionally, with a robust
balance sheet supported by USD137 million in cash, we are committed
to sustainable growth supported by a clear capital policy. We
deeply value our shareholders and our focus on shareholder value
will continue through consistent returns with robust business
growth, strategic reinvestments, and a strong capital foundation,
ensuring that all shareholders, including our minority investors,
benefit from our growth and success.”
Third Quarter 2024 Financial Results
Total revenues for the nine months ended September 30, 2024 were
$160 million, representing an increase of 23% from $131 million in
the same period of 2023. Total revenues for the three months ended
September 30, 2024 were $53 million, representing an increase of
12% from $47 million in the same quarter of 2023. These increases
were mainly because the Company started charging patent and
trademark fees to our franchisee clinics, and due to the expansion
of numbers of our franchisee clinics Total operating expenses for
the nine months ended September 30, 2024 were $56 million,
representing an increase of 20% from $47 million in the same period
of 2023. Total operating expenses for the three months ended
September 30, 2024 were $29 million, representing an increase of
118% from $13 million in the same quarter of 2023. The increases in
the total operating expenses were primarily due to listing-related
consulting and professional fees, stock-based compensation, and
higher office expenses.
EBITDA for the nine months ended September 30, 2024 was $68.4
million, representing an increase of 22% from $56.3 million in the
same period of 2023, mainly due to revenue growth but partially
offset by listing-related consulting and professional fees,
stock-based compensations. EBITDA for the three months ended
September 30, 2024 was $14.8 million, representing a decrease of
36% from $23.3 million in the same quarter of 2023, primarily due
to listing-related consulting and professional fees, stock-based
compensation, and higher office expenses.
Net income for the nine months ended September 30, 2024 was
$40.1 million, compared to $24.3 million in the same period of
2023. The increase was attributed mainly to total revenue growth
but partially offset by increase of total operating expenses. Net
income for the three months ended September 30, 2024 was $2.8
million, compared to $8.1 million for the same quarter in 2023. The
decrease was attributable mainly to higher operating expenses.
Cash Flow and Liquidity Highlights
As of September 30, 2024, SBC Medical maintained a strong
liquidity position, with cash and cash equivalents totaling $137.4
million, up from $103.0 million as of December 31, 2023. This
increase reflects robust cash generation from operating activities,
prudent investment management, and disciplined capital allocation
strategies.
Operating Cash Flow
Net cash provided by operating activities was $27 million for
the nine months ended September 30, 2024, an increase of 23% from
$22 million for the same period in 2023. This growth was driven
primarily by a $15 million rise in net income, bolstered by
stock-based compensation expenses of $12.8 million related to the
Company’s recent public listing, and an improvement in collection
of accounts receivable. These positive factors were partially
offset by changes in accounts payable and tax liabilities, which
reflect the Company’s focus on efficiently managing working capital
in a growing operational environment.
Investing Cash Flow
Net cash used in investing activities totaled $5 million during
the nine months ended September 30, 2024, a decline from $8 million
for the same period in 2023. Key contributor to this decrease
included payments made on behalf of a related party of $5.2
million. The Company continues to strategically deploy capital
towards high-impact assets that align with its long-term growth
objectives.
Financing Cash Flow
Net cash provided by financing activities totaled $11 million
during the nine months ended September 30, 2024, an increase from
$6 million for the same period in 2023. Key contributor to this
increase included proceeds from reverse recapitalization, net of
transaction costs $11.7 million. The change reflects the Company’s
emphasis on self-sustained growth through operating cash flows
rather than external financing, with no significant new debt
undertaken during the period.
Foreign Currency Impact
SBC Medical’s cash flows were impacted by a $0.5 million
currency translation adjustment due to the depreciation of the
Japanese yen against the U.S. dollar. The Company continues to
monitor foreign currency exposure and employ strategies to mitigate
risks associated with currency fluctuations.
With a robust cash reserve and sound operational cash flows, SBC
Medical is confident in its ability to meet near-term liquidity
requirements and to fund future growth initiatives. Management
believes that the current cash position, alongside planned
operational cash flow, will be sufficient to support the company’s
business operations and strategic investments for the next 12
months.
About SBC Medical
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 employee
housing rentals and facility rentals, construction and design of
franchisee clinics, medical equipment and medical consumables
procurement (resale), the provision of cosmetic products to
franchisee 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
franchisee clinic’s customer rewards program (customer loyalty
point program), and payment tools for the franchisee clinics.
For more information, visit https://sbc-holdings.com/
Use of Non-GAAP Financial Measures
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.”
Forward Looking
Statements
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.
SBC MEDICAL GROUP HOLDINGS
INCORPORATED
UNAUDITED CONSOLIDATED BALANCE
SHEETS
September 30,
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
137,393,070
$
103,022,932
Accounts receivable
1,944,604
1,437,077
Accounts receivable – related parties
27,835,179
33,676,672
Inventories
1,985,883
3,090,923
Finance lease receivables, current –
related parties
8,443,338
6,143,564
Customer loans receivable, current
16,125,086
8,484,753
Prepaid expenses and other current
assets
8,372,668
10,050,005
Total current assets
202,099,828
165,905,926
Non-current assets:
Property and equipment, net
13,194,414
13,582,017
Intangible assets, net
16,218,233
19,739,276
Long-term investments
4,905,115
849,434
Goodwill, net
3,545,391
3,590,791
Finance lease receivables, non-current –
related parties
4,629,047
3,420,489
Operating lease right-of-use assets
5,251,418
5,919,937
Deferred tax assets
624,564
-
Customer loans receivable, non-current
6,590,301
6,444,025
Long-term prepayments
4,308,810
4,099,763
Long-term investments in MCs – related
parties
19,561,069
19,811,555
Other assets
15,550,402
15,442,058
Total non-current assets
94,378,764
92,899,345
Total assets
$
296,478,592
$
258,805,271
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
14,873,829
$
26,531,944
Current portion of long-term loans
136,683
156,217
Notes payable, current – related
parties
10,202,360
3,369,203
Advances from customers
565,495
2,074,457
Advances from customers – related
parties
18,994,015
23,058,175
Income tax payable
8,000,808
8,782,930
Operating lease liabilities, current
4,060,844
3,885,812
Accrued liabilities and other current
liabilities
12,054,047
21,009,009
Due to related party
3,532,453
3,583,523
Total current liabilities
72,420,534
92,451,270
Non-current liabilities:
Long-term loans
686,470
1,062,722
Notes payable, non-current – related
parties
11,659,022
11,948,219
Deferred tax liabilities
3,515,825
6,013,565
Operating lease liabilities,
non-current
1,528,972
2,444,316
Other liabilities
1,147,345
1,074,930
Total non-current liabilities
18,537,634
22,543,752
Total liabilities
90,958,168
114,995,022
Stockholders’ equity:
Preferred stock ($0.0001 par value,
20,000,000 shares authorized; no shares issued and outstanding as
of September 30, 2024 and December 31, 2023) (1)
-
-
Common stock ($0.0001 par value,
400,000,000 shares authorized, 103,020,816 and 94,192,433 shares
issued and outstanding as of September 30, 2024 and December 31,
2023) (1)
10,302
9,419
Additional paid-in capital (1)
60,825,115
36,879,281
Treasury stock receivable (270,000 shares
of common stock) - related party
(2,700,000
)
-
Retained earnings
182,923,786
142,848,732
Accumulated other comprehensive loss
(36,078,149
)
(37,578,255
)
Total SBC Medical Group Holdings
Incorporated’s stockholders’ equity
204,981,054
142,159,177
Non-controlling interests
539,370
1,651,072
Total stockholders’ equity
205,520,424
143,810,249
Total liabilities and stockholders’
equity
$
296,478,592
$
258,805,271
(1)
Retrospectively restated for effect of
recapitalization on equity due to reverse acquisition effective
September 17, 2024.
SBC MEDICAL GROUP HOLDINGS
INCORPORATED
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2024
2023
2024
2023
Revenues, net – related parties
$
51,209,243
$
45,119,709
$
152,718,488
$
125,336,653
Revenues, net
1,875,640
2,158,976
8,276,517
5,856,076
Total revenues, net
53,084,883
47,278,685
160,995,005
131,192,729
Cost of revenues
9,845,793
13,780,309
38,816,865
37,256,066
Gross profit
43,239,090
33,498,376
122,178,140
93,936,663
Operating expenses:
Selling, general and administrative
expenses
16,597,032
13,446,618
43,784,637
46,885,138
Stock-based compensation
12,807,455
-
12,807,455
-
Misappropriation loss
-
28,516
-
380,766
Total operating expenses
29,404,487
13,475,134
56,592,092
47,265,904
Income from operations
13,834,603
20,023,242
65,586,048
46,670,759
Other income (expenses):
Interest income
7,950
10,234
37,283
86,345
Interest expense
(5,466
)
(3,978
)
(15,898
)
(37,380
)
Other income
65,922
1,138,869
721,894
3,875,723
Other expenses
(795,158
)
(98,314
)
(2,746,450
)
(581,239
)
Gain on disposal of subsidiary
-
-
3,813,609
-
Total other income (expenses)
(726,752
)
1,046,811
1,810,438
3,343,449
Income before income taxes
13,107,851
21,070,053
67,396,486
50,014,208
Income tax expense
10,273,384
13,012,262
27,254,478
25,683,244
Net income
2,834,467
8,057,791
40,142,008
24,330,964
Less: net income (loss) attributable to
non-controlling interests
1,573
(298,623
)
66,954
(696,812
)
Net income attributable to SBC Medical
Group Holdings Incorporated
$
2,832,894
$
8,356,414
$
40,075,054
$
25,027,776
Other comprehensive income
(loss):
Foreign currency translation
adjustment
20,783,646
(974,249
)
1,543,245
(19,825,222
)
Reclassification of unrealized gain on
available-for-sale debt security to net income when realized, net
of tax effect of nil and $(97,856) for the three months ended
September 30, 2024 and 2023, respectively; nil and $(97,856) for
the nine months ended September 30, 2024 and 2023, respectively
-
(205,383
)
-
(8,760
)
Total comprehensive income
23,618,113
6,878,159
41,685,253
4,496,982
Less: comprehensive income (loss)
attributable to non-controlling interests
180,093
(387,948
)
110,093
(1,129,475
)
Comprehensive income attributable to
SBC Medical Group Holdings Incorporated
$
23,438,020
$
7,266,107
$
41,575,160
$
5,626,457
Net income per share attributable to
SBC Medical Group Holdings Incorporated (1)
Basic and diluted
$
0.03
$
0.09
$
0.42
$
0.27
Weighted average shares outstanding
(1)
Basic and diluted
95,095,144.00
94,192,433.00
94,495,533.00
94,192,433.00
(1)
Retrospectively restated for effect of
recapitalization on equity due to reverse acquisition effective
September 17, 2024.
SBC MEDICAL GROUP HOLDINGS
INCORPORATED
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Nine Months
Ended
September 30,
2024
2023
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income
$
40,142,008
$
24,330,964
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense
2,867,781
9,688,640
Non-cash lease expense
2,908,990
2,424,220
Provision for (reversal of) credit
losses
(127,196
)
282,934
Stock-based compensation
12,807,455
-
Impairment loss on property and
equipment
-
204,026
Realized gain on short-term
investments
-
(223,164
)
Fair value change of long-term
investments
1,682,282
-
Gain on disposal of subsidiary
(3,813,609
)
-
Loss (gain) on disposal of property and
equipment and intangible assets
185,284
(249,532
)
Deferred income taxes
(2,154,837
)
(1,379,922
)
Changes in operating assets and
liabilities:
Accounts receivable
(804,000
)
(924,061
)
Accounts receivable - related parties
4,971,911
(19,979,099
)
Inventories
763,075
(4,038,874
)
Finance lease receivables - related
parties
(3,430,267
)
17,241,740
Customer loans receivable
12,860,220
-
Prepaid expenses and other current
assets
902,230
8,173,153
Long-term prepayments
432,380
(1,991,626
)
Other assets
(348,178
)
(1,884,352
)
Accounts payable
(10,511,619
)
6,712,977
Notes payable - related parties
(14,030,092
)
-
Advances from customers
(1,401,437
)
(681,973
)
Advances from customers - related
parties
(3,565,778
)
(7,430,332
)
Income tax payable
(549,446
)
16,518,062
Operating lease liabilities
(2,971,946
)
(2,335,113
)
Accrued liabilities and other current
liabilities
(9,010,270
)
298,743
Accrued retirement compensation expense -
related party
-
(22,082,643
)
Other liabilities
81,290
79,215
NET CASH PROVIDED BY OPERATING
ACTIVITIES
27,886,231
22,753,983
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property and equipment
(1,974,285
)
(2,299,045
)
Purchase of intangible assets
-
(1,683,030
)
Purchase of convertible note
(1,700,000
)
(1,000,000
)
Prepayments for property and equipment
(843,740
)
(417,353
)
Advances to related parties
(617,804
)
(1,017,292
)
Payments made on behalf of a related
party
(5,245,990
)
-
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 from acquisition of
subsidiary, net of cash received
-
722,551
Long-term loans to others
(80,793
)
(421,429
)
Repayments from related parties
5,990,990
734,358
Repayments from others
62,927
47,356
Proceeds from sales of short-term
investments
-
4,125,813
Proceeds from surrender of life insurance
policies
-
3,954,760
Disposal of subsidiary, net of cash
disposed of
(815,819
)
-
Proceeds from disposal of property and
equipment
1,971
8,046,007
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES
(5,554,039
)
8,659,196
CASH FLOWS FROM FINANCING
ACTIVITIES
Borrowings from related parties
-
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
(89,448
)
(8,691,462
)
Repayments to related parties
(65,305
)
(7,619,266
)
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
11,584,038
6,262,589
Effect of changes in foreign currency
exchange rate
453,908
(11,982,793
)
NET INCREASE IN CASH AND CASH
EQUIVALENTS
34,370,138
25,692,975
CASH AND CASH EQUIVALENTS AS OF THE
BEGINNING OF THE PERIOD
103,022,932
51,737,994
CASH AND CASH EQUIVALENTS AS OF THE END
OF THE PERIOD
$
137,393,070
$
77,430,969
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest expense
$
15,898
$
37,380
Cash paid for income taxes
$
31,332,123
$
12,608,072
NON-CASH INVESTING AND FINANCING
ACTIVITIES
Property and equipment transferred from
long-term prepayments
$
164,781
$
7,681,830
An intangible asset transferred from
long-term prepayments
$
-
$
17,666,115
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
$
-
$
1,029,518
Remeasurement of operating lease
liabilities and right-of-use assets due to lease modifications
$
2,408,752
$
2,110,079
Issuance of promissory notes to related
parties in connection with loan services provided
$
20,398,301
$
-
Issuance of common stock to a related
party from conversion of convertible note
$
2,700,000
$
-
Issuance of common stock as incentive
shares
$
34
$
-
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
SBC MEDICAL GROUP HOLDINGS
INCORPORATED
Unaudited Reconciliations of
GAAP and Non-GAAP Results
For the Three Months Ended
September, 30
For the Nine Months Ended
September, 30
2024
2023
2024
2023
Income from operations
13,834,603
20,023,242
65,586,048
46,670,759
Depreciation and amortization expense
1,018,359
3,287,809
2,867,781
9,688,640
EBITDA
14,852,962
23,311,051
68,453,829
56,359,399
EBITDA Margin
28
%
49
%
42
%
43
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241113823490/en/
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
SBC Medical (NASDAQ:SBC)
Historical Stock Chart
From Oct 2024 to Nov 2024
SBC Medical (NASDAQ:SBC)
Historical Stock Chart
From Nov 2023 to Nov 2024
