Hello, and welcome to Virtual Investor Conferences. On behalf of OTC Markets and our co-host, Zach Small-cap Research, we're very pleased you joined us for our next presentation from SBC Medical Group Holdings. Their question-and-answer session will be moderated by M. Marin, a Senior Equity Research Analyst with Zach Small-cap Research. Please note you can submit questions for the presenter in the box to the left of the slides, and you can also view a company's availability for one-on-one meetings through the Schedule Meetings tab found on the conference platform. At this point, I'm very pleased to welcome Yuya Yoshida, Executive Vice President and Chief Financial Officer of SBC Medical Group Holdings, which trades on the NASDAQ under the symbol SBC. Welcome, Yuya and M. Marin.
Hello, everyone. I'm Yuya Yoshida, Executive Vice President and CFO of SBC Medical Group Holdings. Thank you for taking the time out of your busy schedule to join us today. In this briefing, I'll provide an overview of our company, financial status, the current market environment, the future direction, and capital policy. Okay, first of all, I'll touch up on the company overview and the business model. SBC primarily provides comprehensive management support services to franchise clinics focused on aesthetic medicine, generating income through franchise fees. In September 2024, SBC achieved a significant milestone by being successfully listed on the NASDAQ Stock Exchange. This listing not only reflects our strong financial performance and growth potential, but also marks the beginning of a new chapter in our expansion, both domestically and internationally.
While aesthetic medicine remains our primary area of focus, our franchise clinics have expanded their offering to include a comprehensive range of specialized medical services, including plastic surgery, ophthalmology, health treatment, and infertility treatment, in addition to aesthetic medicine. This diversification allows us to meet a broad spectrum of patient needs, enhance customer retention, and further strengthen our position as a leader in the field of aesthetic and specialized medical care. While competition in Japan's aesthetic medicine market is intensifying due to new entrants, our company has consistently maintained strong growth by implementing strategic pricing models and expanding our clinic network nationwide. This initiative has enabled us to steadily increase our customer base despite intensifying competition. Today, we serve more than 6 million patients annually, making us the largest provider in Japan.
This scale not only demonstrates the widespread trust and recognition we have earned from our clients, but also provides us with valuable operational efficiencies and data-driven insights that further enhance our services. At the core of our success is a customer-centric philosophy. We place great importance on ensuring that customers feel they receive more than they paid for. As a result of these efforts, we have achieved an exceptionally high repeat visit rate, which is an important indicator of both customer satisfaction and brand loyalty. Next, our business segment overview. Our core business consists of aesthetic medicine, medical services, and overseas operations, these three pillars, each playing a vital role in driving our continued growth and market presence. In addition to these main areas, we are focusing on strengthening the platform business, which serves as our foundational infrastructure supporting the operations and development of the entire company.
In the aesthetic field, we have adopted a comprehensive multi-brand strategy to meet the increasingly diverse needs of our customers. For example, Shonan Beauty Clinics offers a diverse range of services designed to meet the needs of various age groups, aesthetic preferences, and budget levels. This strategy enables us to reach a wide variety of customer bases, respond flexibly to shifting market trends, and consistently uphold the high standard of service across all our brands. Now, about the financial result of Q1, fiscal year 2025. Although it may seem unclear at first glance, we conducted a business restructuring in 2024, including withdrawal from the staffing business and excluding SBC Kijimadaira Resort and the SKYEART Academy from consolidation. As a result, revenue decreased by 14% year over year, but excluding these one-time effects and currency fluctuations, we have achieved around 5% growth.
Our EBITDA margin is 52%, and annualized ROE stands at 41%, maintaining strong profitability. Next, I'm going to touch upon the robust balance sheet. We remain in a strong financial position, supported by a healthy cash position and minimum debt obligations. This strong balance sheet provides us with the flexibility and resilience to pursue strategic growth opportunities. We plan to allocate our available capital toward a balanced mix of organic and inorganic investments, both within Japan and in international markets. These investments will focus on expanding our clinic network, enhancing technological capabilities, developing new services, and pursuing strategic partnerships or acquisitions that align with our long-term vision. By leveraging our financial strengths, we are well positioned to drive sustainable growth and create lasting value for our stakeholders. Next, our pricing strategy. In the dermatology domain, we implemented a major overhaul of pricing in March 2025.
Previously, the widespread use of promotional campaigns and discount vouchers often made our final pricing unclear, and in some cases, gave the impression that our services were more expensive than those of our competitors. To address this, we streamlined our pricing structure by revising both standard rates and promotional strategies, resulting in a clearer, more attractive, and customer-friendly pricing model. Although pricing was lowered, the overall cost efficiency, including marketing and promotional expenses, has improved considerably, contributing to a healthier and more sustainable business model. On the other hand, for women's hair removal services, we adjusted pricing upward to reflect the high demand and the ongoing challenge of appointment availability. These price increases were implemented to ensure fair access to services, optimize clinic scheduling, and maintain a high standard of care. We have revised the franchise fee structure to better support the long-term growth and sustainability of our franchise clinics.
Under the previous model, the fee framework occasionally placed a financial burden on newly opened clinics, potentially hindering their early-stage development. To address this, we implemented adjustments aimed at easing the initial cost pressures while aligning incentives for long-term success. While these changes are expected to result in a temporary increase in revenue, the primary objective is to foster a healthier and more resilient franchise ecosystem. We believe this approach will contribute positively to the overall development and stability of the company. Next, our future policy and strategy. Now, regarding our midterm growth strategy toward 2027, by 2027, our vision is to evolve into a global medical services company that meets a wide array of customer needs, with a strong emphasis on aesthetic medicine. We aim to diversify and expand our service offerings, positioning ourselves as a leader in the global healthcare market.
Alongside this, we are focusing on building a robust business in the international market, which will play a key role in accelerating growth in the years to come. We will expand our strategy according to the three pillars: aesthetic medicine, medical services, and the overseas business. First of all, Japan market. The Japanese market continues to grow as a whole, with penetration at around 10%, indicating substantial opportunities for growth. While our primary demographic has traditionally been women in their late teens to 30s, we anticipate a growing demand for middle-aged women seeking anti-aging treatment, as well as male customers who are increasingly exploring aesthetic medicine. To capitalize on these emerging trends, we will continue to strengthen our multi-brand strategy to flexibly respond to these diverse needs. Next, inbound strategy. The inbound business is also a promising growth area.
We are enhancing our presence on social media, especially in China, which has led to a notable increase in visits and revenue from foreign tourists. In addition to enhancing our digital outreach, we are also strengthening our language support infrastructure by hiring more interpreters, ensuring seamless and high-quality experiences for international customers. These efforts will not only diversify revenue growth, but also position us as a welcoming and accessible destination for tourists seeking aesthetic and medical services. Next, expansion of medical business. In the medical field, we focus on areas with high affinity to aesthetic medicine, such as orthopedics, ophthalmology, infertility, and health treatment. By aligning these services, we aim to create a holistic offering that appeals to a broad range of customer needs. We aim to differentiate ourselves from competitors by leveraging our expertise in marketing and management developed through private medical practice.
This unique combination of medical knowledge and business acumen positions us to deliver exceptional value and drive sustainable growth in these expanding fields. Next, overseas business expansion. We are focusing on the U.S. and Asia for international expansion. The U.S. med spa market is growing, attracting major capital. SBC aims to establish a winning formula in this field and enhance its presence. Besides launching our own med spa, we are considering providing management and marketing services based on our experience in Japan. On the Asia front, in November 2024, we strategically acquired AHH, a leading provider in Singapore that operates approximately 20 aesthetic and medical clinic locations under four distinct brands. This acquisition marks a key milestone in our expansion strategy, serving as a critical hub for our operations across Asia.
We will continue our strategic expansion into neighboring countries, leveraging regional synergies and market insights to establish a strong and scalable presence across Asia. I'm going to touch upon a recent initiative called SBC Wellness. We recently launched SBC Wellness, a corporate employee benefit program, which is designed to meet the growing demand for employee satisfaction and health-oriented workplace initiative. As interest in employee satisfaction and health management grows, and the rising number of companies incorporating our aesthetic and fertility services into their benefit offerings, this not only enhances employee motivation and engagement, but also opens a new promising market segment for us within the B2B space. In addition, in September 2024, we announced a strategic partnership with B4A, a leading vertical SaaS provider specializing in solutions for aesthetic clinics. Last part, capital policy and share liquidity.
We believe our current stock price does not accurately reflect the strength of our underlying fundamentals, likely due to limited liquidity, which has also been a concern raised by institutional investors. With that, we are considering the following measures. First, improving supply and demand by attracting new major shareholders by repurchasing shares and paying dividends to enhance shareholders' value. Second, additional liquidity measures, including issuing new shares or partial sales of founder-owned shares. That is what we are considering. Share back. As an initial step, we approved a 5 million share repurchase program. This decision reflects our confidence that the current stock price does not fully represent our strong financials. The buyback also offers liquidity to shareholders seeking to exit, thereby helping to alleviate overhang pressure in the market.
The repurchased shares are intended to be utilized for our future stock-based compensation plan, aligning employee incentives with long-term shareholder value and supporting talent retention. We aim to enhance our shareholder value through effective capital allocation, including growth investment and dividends payment. Okay, this concludes our presentation on the current status and future direction of SBC Medical Group. Thank you very much for your attention.
Thank you. Thank you for that very comprehensive presentation. You answered some of my questions during your presentation, but if we could get a little bit more color in terms of the share buyback, you're balancing. Yes. So you want to balance the share liquidity in the market with the share buyback. Could you give us a little bit more color in terms of what you're thinking and how you're going to match some of those buybacks with other initiatives?
Yeah.
Regarding our stock-based compensation, the scheme is currently under design, and we are not yet at a stage where we can share specific details. However, our clear intention is to build a structure that contributes to the sustainable enhancement of corporate value. As for improving trading liquidity, we believe it is essential to address both the supply-demand balance of our shares and provide additional liquidity. Our approach involves uncovering new investor interests through steady and proactive IR activities, while also implementing appropriate capital policies aimed at improving market dynamics. In parallel, we are considering options for additional liquidity measures, such as a secondary offering of founder-held shares, the issuance of new shares, or maybe a potential warrant exchange. However, at this point, no concrete decisions have been made regarding which measures to implement over the specific timeline.
That being said, we are fully aware of concerns and potential dilution resulting from additional equity issuance. We fully recognize that point. However, we also believe the current share price does not fully reflect our strong financials. Moreover, we have received feedback from institutional investors suggesting that increased free float could improve the supply-demand balance and even lead to upward pressure on the stock, regardless of the dilution. Our objective is to pursue growth-oriented capital policies that will expand the free float and enhance liquidity in the market. We will continue to engage closely with our investors and make thoughtful, well-considered decisions on these matters. Yeah, that's my answer.
Thank you. You touched upon the international footprint and your optimism about being able to expand that footprint.
Can you tell us a little bit, will you require online local operators who know the market, or how will you plan to do that kind of international expansion?
Okay. In addition to the global expansion, when expanding our business internationally, we believe it is critically important for us to first respect and adapt to local operational practices because aesthetic medicine is a highly domestic business affected by their own procedure and culture. Understanding and aligning with the local market is a foundation for successful entry. From there, we aim to selectively integrate our expertise and know-how that was developed in Japan, whereby we believe it can contribute to further growth and differentiation. With regard to local medical services functions, our approach depends on the state and scale of the business in each market.
In the early phases, it may be more efficient to provide certain services from Japan, particularly in terms of quality control and resource allocation. However, once the business reaches a certain point, certain scale, it becomes more effective and efficient to deliver medical services locally through properly established local infrastructure and personnel. Currently, as part of our efforts to explore new business opportunities and potential M&A in the U.S . market, we have appointed two local management representatives on the West Coast to lead our activities on the ground. Thank you. When you originally described some of what you just talked about in the presentation, some of the pricing issues, and your response, I think, is to multi-pricing initiative and also multi-branding, can you give us some color on what kind of response you're seeing in the marketplace and if you're pleased with what you're seeing so far?
Thank you for your question. Yeah, we believe our multi-brand strategy is very critical for our expansion. Our multi-brand strategy continues to play a key role in addressing the increasingly diverse needs of our customer base. By tailoring services across multiple brands, we are able to segment the market effectively, capture a broader audience, and deliver a highly personalized customer experience. Yeah, as for the more recent developments, in April, we launched a new brand called SBC NeoSkin Clinic, NeoSkin Clinic, built around the concept of making cutting-edge aesthetic treatments more accessible and affordable. We are pleased to announce that the clinic has been very well received by customers to the point where appointment availability is very limited due to very strong demand. This early traction has given us a strong sense of confidence in the direction of the brand.
Okay, I think we're at time.
I appreciate all of your responses, but if people want to follow up, if we did not get a chance to get to other questions from the audience, please feel free to reach out directly to the company or to Zach's, and we will be happy to make sure your questions are answered. With that, I think this concludes the presentation. Thank you, everyone, for your time.
Thank you very much for your attention.