All right, good morning, good afternoon, welcome back to the 86th Emerging Growth Conference and day two of our two-day virtual investor conference. I'm Anna Berry. Today we're running until about 5:00 P.M. Eastern. When we switch to the next company, you'll see a black screen for a moment. Stay with us. If you do experience downtime for more than a minute or two, just refresh your browser. Everything usually works properly once we do that. Our platform does work best on Google Chrome, so if you're watching from an Apple device, you have to hit the play button to start the session. All of our conferences are uploaded to the Emerging Growth Conference YouTube channel, so please subscribe, youtube.com/emerginggrowthconference, and during each company's presentation today, you can submit questions through our webcast module, and we will attempt to address as many of these at the end of their presentation.
One last note, after today's event, you'll be redirected to the registration page for our next conference, so please stay on or come back early to reserve your spot. All right, let's begin with our first company. We have SBC Medical Group Holdings Inc., trades on the NASDAQ under the symbol SBC, and it's headquartered in Irvine, California, and Tokyo, Japan. Owns and provides management services and products to cosmetic treatment centers. Happy to welcome Executive Vice President and CFO, Yuya Yoshida. Welcome back to the conference today, Yuya.
Thanks, Anna. Hi. Hello, everyone. I'm Yuya Yoshida, 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 will provide an overview of recent performance, business progress, and capital proceeds. Okay, let's move on to slide five. Okay, SBC primarily provides comprehensive management support services to franchise clinics with a focus on aesthetic medicine. We generate income through franchise fees. 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 orthopedics, ophthalmology, height treatment, and fertility treatment. This diversification allows us to meet a broader spectrum of customer needs, enhance customer retention, and further strengthen our position. Next, let me briefly touch on our franchise clinics.
This July, Jenn clinics joined our network, expanding our total number of clinics to 259, an increase of 36 clinics since last year. Even though the competition in Japan's aesthetic medicine industry is severe, the number of customers continues to steadily increase, with 6.3 million visits annually. This scale is unmatched in Japan. Yeah, next P&L. Moving to the second quarter of 2025 earnings. In 2024, we strategically restructured our business, exiting staffing services, and deconsolidating some affiliates. In April this year, we also revised our franchise fees. As a result, total revenue unfortunately declined 18% year-on-year basis. This is strategic restructuring to set the groundwork for future growth. Therefore, from the third quarter onward, we intend to accelerate the growth. On one hand, an increase in point redemption by customers at our clinics reduced revenue, which in turn impacted management service revenues.
On the other hand, procurement and rental revenue rose due to higher purchase of medical materials and the replacement of hair removal medical devices. The elevated effective tax rate this quarter is due to treatment differences in aircraft sales between Japan and the US GAAP, which is a one-time transaction. Okay, next. This July, we acquired MB Career Lounge, bringing Jenn Clinic into our clinic network. Jenn Clinic operates six clinics across Japan and is known for customized laser treatment based on three doctors' skin diagnoses. The doctors combine an array of lasers to provide a personalized recipe to each customer. With this, they deliver a unique treatment matched to each client while communicating the prescribed strengths. The reason why we focused on the found interest in Jenn Clinic's unique strengths, this is why we initiated a contact and asked them to join our network.
They acquire high customer satisfaction and retention, and on top of that, their marketing costs are extremely low and their business is achieving high profitability. Yeah, next, let me turn to Dermatological Aesthetic Medicine Japan. This is a high-growth area with significant potential, and we are addressing it through a multi-brand strategy. In April, we launched a Neo Skin Clinic, targeting expert-level customers with advanced global treatment. Since opening, it has quickly gained popularity with appointments already difficult to secure. Among our concept clinics, Neo has ramped up the fastest with an average spending per customer that exceeds our existing clinics as the best Jenn Clinic. These two, Neo and Jenn, will be key drivers for our growth. Yeah, next, our medical tourism strategy. With the Japanese yen awakening, we are seeing an increase in overseas tourists visiting Japan, as you know.
To capture this opportunity, we are strengthening our medical tourism business. In particular, we are focusing on Chinese tourists, enhancing our presence on the popular social network platform RED, increasing the number of interpreters and hosting promotional events in Shanghai. These initiatives have already delivered strong results. Next, strategic initiative in the medical business. Orthopedics and AGA treatment are high-growth and high-margin areas for us, so we concentrate our management resources here for the future. Now, for example, in orthopedics, we are expanding from short stature treatment into joint pain therapy and rehabilitation in response to aging demographics. As Japan's population continues to age, this type of business has high-growth potential. Yeah, next, touch upon the strategic initiative. We are currently enhancing our structure. In the U.S., we welcomed renowned plastic surgeon Dr. Steven Cohen as an advisor.
In April, Stephen Rogers, previously with Amazon and Rakuten, with extensive experience in business development and M&A, joined the global head of planning and strategy. In Southeast Asia, Singapore, following our acquisition of AHH last year, we launched Japanese language services to the local Japanese community. All these initiatives reflect our commitment to expand our global business. We have also welcomed a senior marketing leader with experience at P&G, Eli Lilly, and Adobe as the CMO to drive our global branding and marketing efforts. Yeah, next, touch upon our balance sheet. Yeah, we continue to maintain our robust financial base with sufficient cash on hand. These funds will be actively invested in domestic and global organic growth, as well as strategic growth opportunities, including M&A. This underpins our aspiration for long-term growth.
Finally, regarding our capital policy, we recognize the liquidity in our shares remains limited, making trading difficult for many institutional investors. To address this, we are working to improve the supply-demand balance and are considering new share issuance and partial sales by the founder. These steps aim to improve accessibility for broader investor base. Yeah, from May to July, we conducted our first ever share buyback program, which we believe contributed positively to our share price and liquidity. In June, we were added to the Russell 3000 Index, which we understand will further enhance our visibility and liquidity. And going forward, we will continue to monitor market conditions closely and take appropriate timely actions. Yeah, this concludes my presentation. Thank you very much for your attention.
Wonderful. Thank you so much. Yeah, so let's talk about the second quarter results. They were not very strong. So what is your outlook going forward?
Okay. Yeah, as I mentioned partially earlier, we've taken steps such as business restructuring and revising franchise fees so that we can drive stronger, more sustainable growth, so as a result, we expect our second quarter result came in weak on a year-on-year basis, but we are convinced that the necessary actions have already been taken, so starting in the next third quarter, we aim to get back on the growth track.
Perfect. And in Japan, only about 10% of the population uses aesthetic medicine, so it suggests significant growth potential. Will you encourage first-time customers to visit SBC clinics, and how are you going to do that?
Okay, thank you. Good question. Yeah, first of all, we think it's crucial that customers feel they are getting more value than what they paid. If they feel satisfied with the value, they'll come back again and recommend us to friends and family. At the same time, it's also very important that potential customers see SBC clinics as safe and reliable. If people feel comfortable dropping by casually, we can attract more first-time customers who haven't tried aesthetic medicine before. Yeah, that's where we are taking actions now.
So in addition to aesthetic medicine, SBC is expanding into other areas such as orthopedics, fertility treatment, and ophthalmology. So what is the aim of this strategy?
Our ultimate aim is to help improve happiness for people around the world and through that become the number one medical group globally. As a result, we believe medicine can do a lot to contribute to this goal. On the business side as well, we can apply the know-how we built up in private medical care to solve many challenges. And fields like orthopedics, fertility treatment, and ophthalmology all have both strong growth potential and profitability. So we see them as very promising areas.
Good. And so how do you plan to balance growth investment with shareholder returns?
Yeah, good question. We think it's very important to strike the right balance between growth investment and shareholder returns. Of course, business growth is a foundation. So our priority will be to generate funds for growth investment. At the same time, it's also important to have the support of a wide range of investors in capital markets. So we want to use our capital in a way that keeps that balance in mind.
Talk a little bit about your future outlook with SBC.
First, we want to make our business in Japan, our core business, which is our foundation, even stronger in the fast-growing field of dermatological non-invasive treatment, with push forward with a multi-brand strategy to meet diversified customer needs more precisely. In the surgical area, we keep developing new procedures backed by the high skills of our doctors so that we can keep building even greater competitiveness. At the same time, we want to establish a solid business foundation in the U.S. and Southeast Asia, while also expanding into general medical areas here in Japan. Through all of this, we aim to broaden SBC's business overall.
Wonderful. Well, thank you, Yuya. Do you have any closing remarks for our viewers today?
Yeah, thank you very much for all your questions. That concludes our presentation. We will continue to prioritize transparent communication with our investors and proactively share updates going forward. We sincerely appreciate your ongoing support. If you would like to get in touch with our team, please feel free to reach out to the contact listed in the banner below. Thank you so much.
Wonderful. Thank you so much, and thank you for kicking off our day two of our conference today. We'll see you again soon.
Thanks so much.
All right, everyone.