SBC Medical Group Q1 Earnings Call Highlights

Key Points

• Q1 revenue fell 9% to $43 million, but management said the drop was mainly due to prior fee structure revisions and a one-time gain in the prior-year period. Excluding those items, underlying revenue rose 11% and underlying EBITDA increased 17% year over year.
• Clinic activity improved as customer counts and average revenue per visit rose, with management saying competitive pressure in Japan and global aesthetic markets has eased. SBC also pointed to growth in adjacent businesses like AGA and dentistry.
• Management is prioritizing growth investments, AI and M&A over share buybacks, with AI expected to improve efficiency and customer experience. The company also sees promising acquisition opportunities in Japan and is pursuing a U.S. strategy centered on collaboration with OrangeTwist rather than large-scale expansion.

SBC Medical Group NASDAQ: SBC reported first-quarter 2026 revenue of $43 million, down 9% from a year earlier, as management said prior fee structure revisions continued to weigh on reported results even as underlying clinic activity improved.

Yuya Yoshida, chief financial officer of SBC Medical Group Holdings, said the revenue decline was primarily tied to fee structure revisions that took effect in April of last year. Those changes reduced franchising revenue by $6.2 million and management services revenue by $2.4 million, for a total negative impact of $8.7 million. Procurement revenue and rental services revenue also declined year over year, while management services revenue was partly offset by an increase in point revenue.

Yoshida said net income attributable to SBC Medical Group also declined year over year, in part because the prior-year quarter included a one-time life insurance surrender gain of $8.7 million.

Excluding the $8.7 million impact from fee structure revisions and adjusting for a $1.3 million difference in the AHH consolidation period, Yoshida said underlying revenue grew 11% year over year. He also said underlying EBITDA rose 17% year over year when excluding the fee structure revision impact.

“While the headline figures show a decline in both revenue and profit, I would like to emphasize that excluding the impact of the fee structure revisions from the prior year, both revenue and EBITDA demonstrated solid underlying growth,” Yoshida said.

Clinic Activity Improves as Competition Eases

Yoshida said both the number of customers and average revenue per visit increased year over year, contributing to higher total clinic revenue, including same-clinic revenue. In response to an analyst question, he said the company sees signs that competitive pressure in the Japanese and global aesthetic markets has eased compared with prior periods.

“Our domestic clinic operations are performing well,” Yoshida said. “We are expanding our customer base while maintaining a consistently high repeat customer ratio. The average customer ticket, average revenue per customer, has also begun to recover.”

He said the company’s focus remains on strengthening customer trust while capturing underlying market growth. Yoshida also pointed to momentum in non-aesthetic categories, including AGA and dentistry, describing them as adjacent areas with promising growth potential.

Asked whether the impact of pricing and fee structure changes from early 2025 is now largely over, Yoshida said management views fiscal 2025 as a transitional year that put the company on a healthier footing. He said the reported revenue decline reflected restructuring and fee structure changes, but profitability has improved and the earnings base has become more normalized.

Looking ahead, Yoshida said the company expects underlying growth trends to become more visible as the year progresses and the year-over-year impact of the prior fee structure revisions fades. He cautioned that variability and seasonality could affect results, but said management is confident in the overall direction of the business.

Margins and AI Initiatives

Yoshida said SBC Medical Group expects margins to remain stable and improve over time. He pointed to the company’s artificial intelligence initiatives as a key driver of both top-line growth and cost efficiency.

According to Yoshida, AI is expected to improve customer experience while helping the company build a leaner and more efficient organization. He said the business remains labor-intensive, but AI has meaningful potential to improve productivity and reduce operating costs over time.

Management is prioritizing AI projects where implementation is relatively simple and returns can be verified quickly. Yoshida cited internal manual searches as one example, noting that the company has a wide variety of treatments and internal manuals that counselors and nurses may need to access. AI could help employees find the appropriate materials more efficiently.

Yoshida also said the company has taken a disciplined approach to hiring at headquarters, including a principle-based pause on some mid-career hiring. He said automation and workflow redesign could create additional room to streamline operations over time.

Growth Investment, M&A and International Strategy

Asked about the company’s cash position, Yoshida said growth investment remains SBC Medical Group’s top priority. He said the number of clinics the company supports is a key performance indicator for both revenue and profit.

Yoshida said SBC Medical Group is seeing a steady inflow of potential M&A opportunities, particularly due to intense competition in the Japanese aesthetic medical market. He said the company views potential benefits from inorganic M&A opportunities this year and next year as “very promising.”

On U.S. M&A valuations, Yoshida said valuations are relatively expensive compared with Japan. He said U.S. med spa valuations are generally above 5 times EBITDA and sometimes above 10 times, adding that the company views acquisitions in the 5 times to 8 times EBITDA range as potentially reasonable.

The company’s U.S. strategy is centered on collaboration with OrangeTwist rather than a large-scale standalone expansion, Yoshida said. He identified three focus areas for the relationship: marketing support, AI implementation support and a proof of concept for longevity clinics at selected OrangeTwist med spa locations.

Yoshida said the company is also considering the possibility of bringing the OrangeTwist brand to Asian countries or Japan over the long term, but said there is no concrete timeline. For Southeast Asia, he said a partnership model may be preferable because aesthetic medical markets are local and influenced by culture and customer preferences. However, he added that SBC Medical Group remains open to direct M&A depending on opportunities.

Inbound Demand and Multi-Brand Strategy

Yoshida said inbound tourist revenue remains a relatively small portion of revenue, but growth is strong. He did not provide specific inbound customer metrics during the call, but said the company may include more data on inbound customers in the future.

He cited initiatives such as inviting one of the company’s doctors to China to explain treatment expertise to customers in mainland China. Yoshida said such initiatives are helping increase the number of inbound customers.

SBC Medical Group is also continuing its multi-brand strategy to serve different customer segments. Yoshida highlighted NEO Skin Clinic, which targets customers with high aesthetic medical literacy, including those interested in traveling to Korea for up-to-date treatments. He said the brand has introduced newer medical devices, including laser devices.

He also mentioned JUN CLINIC, a medical clinic group acquired by the company, which he said targets customers with lower aesthetic medical literacy. Yoshida said the multi-brand approach is helping the company capture diverse customer needs.

Buybacks and Liquidity

Asked about SBC Medical Group’s share repurchase program, Yoshida said the company does not currently view buybacks as a high-priority tool. He said management’s priority is improving liquidity, and noted that share repurchases reduce the float.

Instead, Yoshida said the company is focused on expanding analyst coverage, building its institutional investor base and pursuing proactive investor relations engagement. Asked about potential founder share sales in 2026, Yoshida said that decision would be made by the founder, but added that increasing liquidity and floating shares remains a top priority for the company.

About SBC Medical Group NASDAQ: SBC

SBC Medical Group, Inc is a publicly traded healthcare management services company listed on the Nasdaq under the ticker SBC. The company specializes in supporting in-office ancillary service providers by offering a suite of administrative and operational solutions designed to streamline practice management and enhance revenue performance. Its core mission is to help physician practices, imaging centers and other ancillary service providers focus on patient care while outsourcing complex back-office functions.

The company's primary offerings include revenue cycle management, medical billing and coding, compliance oversight and transcription services.

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