EX-99.1 2 ex99-1.htm

 

Exhibit 99.1

 

SBC Medical Group Holdings Inc. Reports Third Quarter 2024 Financial Results

 

Irvine, California, U.S.A., Nov, 13, 2024 (Newswire) – 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.

 

Contacts

 

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 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  %