Sbc Medical Group (SBC -4.96%), a provider of cosmetic and medical services with a broad franchise and technology platform, released its earnings for the second quarter of fiscal 2025 on August 13, 2025. The company reported GAAP earnings per share of $0.02 and revenue of $43,358,847. Both figures missed analyst estimates, with GAAP EPS 85% below the consensus $0.135 projection and revenue down 3.8% from the expected $44.71 million. Year-over-year, GAAP revenue declined by 18% and net earnings dropped 87%, as the company underwent major structural changes and strategic divestitures. Overall, the quarter showed meaningful contraction in both topline and profitability metrics, offset partially by strong gains in customer and franchise volume. Despite these operational advances, margin compression and the lack of forward guidance remain important concerns for investors reviewing this release.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.02 | $0.14 | $0.20 | (90.0%) |
| Revenue (GAAP) | N/A | $44.71 million | $53.1 million | (18.3%) |
| Income from Operations | N/A | $27.3 million | N/A | |
| EBITDA | $15.2 million | $28.1 million | (46.0%) | |
| EBITDA Margin | 35% | 53% | (18.0 pp) |
Source: Analyst estimates for the quarter provided by FactSet.
Company Overview and Key Success Factors
Sbc Medical Group operates as a franchise-based provider of cosmetic surgeries, medical treatments, and related healthcare support. It serves millions of customers across Japan and has started expanding into other regions. Its portfolio covers surgical and non-surgical procedures, as well as IT solutions, procurement, and business management support for affiliated clinics.
Recently, the company has focused on scaling its franchise network, increasing its service offerings, and enhancing its customer experience. Customer loyalty and repeat visits are important measures of satisfaction in this sector.
Quarter Review: Financial and Operational Highlights
The period saw pronounced financial declines by nearly every measure. GAAP revenue dropped 18% year-over-year, falling meaningfully short of both analyst targets and the previous year's figure. The company attributed much of this contraction to the discontinuation of its staffing business and targeted divestitures within its operations. These strategic actions reduced top-line revenue but are framed by management as necessary for focusing on areas with higher potential long-term returns.
EBITDA, a non-GAAP measure of operational profitability that adds back interest, taxes, depreciation, and amortization, was down 46% year-over-year. The EBITDA margin, a non-GAAP financial measure reflecting operational efficiency, fell by 1,800 basis points to 35%. This sharper decline in EBITDA margin (non-GAAP) demonstrates significant pressure on the company’s ability to convert sales into profits, likely due to both lost high-margin revenue streams and cost structure challenges as the company repositions itself.
Net income attributable to the company (GAAP) fell from $18.5 million to $2.5 million. The drop-off was compounded by higher foreign exchange losses and a step-up in other expense items, as noted in the company's earnings statements. Operating cash flow also turned negative, with a net outflow of $6.4 million in the first half of FY2025 compared to an inflow of $22.9 million in the prior-year period. The company relied partly on $17,735,717 in proceeds from life insurance redemptions to bolster its cash position in the first half of FY2025. Shareholders’ equity grew, mostly as a result of accumulated retained earnings and positive changes in currency translation, providing some cushion to the balance sheet.
Customer and franchise trends showed bright spots amidst the financial declines. The number of franchise locations rose to 259 as of June 30, 2025, an increase of 36 from June 30, 2024. Customer visits in the past twelve months reached 6.31 million, up 14% for the period ended Q2 FY2025. The company's reported repeat rate rose to 72% for the last twelve months ended Q2 FY2025, indicating that a significant proportion of customers return for additional procedures. Management continued to highlight the strength and expansion of its Shonan Beauty Clinic brand, the main provider of cosmetic treatments in its portfolio.
Service range continued to broaden, with ongoing integration of IT software solutions, remote consultations, procurement, construction management, and customer loyalty programs. Recent acquisitions, such as the addition of MB career lounge and JUN CLINIC (a high-spend clinic), were cited as steps to enhance the company's management support and draw in franchisees with larger revenue bases per location. However, the scale of these additions was not enough to counter the drag from discontinued units.
From a product and service view, Sbc Medical Group’s core operations focus on high-volume, franchise-based cosmetic treatment clinics, but it has an expanding toolkit that includes business software, rental services, and healthcare support products. This push to offer broader support to its franchisees aims to raise both customer satisfaction and average spend, helping to offset the impact of exiting lower-growth lines.
Looking Ahead: Guidance and Investor Considerations
Management did not provide explicit financial guidance for the next quarter or full fiscal year. Instead, comments reiterated the company’s confidence in its strategic shift towards higher-margin and scalable franchise business, as well as capturing new growth opportunities. The exact targets or expected ranges for revenue, margins, or store additions were not announced.
Also, the high repeat customer rate should be watched as a sign of continued brand strength. Lastly, cash flow performance and the sustainability of recent balance sheet improvements will be critical in evaluating the group’s overall stability.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
