By M. Marin
NASDAQ: SBC
READ THE FULL SBC RESEARCH REPORT
Pro forma revenue grew 11% year-over-year
SBC Medical Group Holdings (NASDAQ: SBC) provides end-to-end solutions enabling aesthetics clinics to launch, expand, and/or operate their businesses. SBC reported 1Q26 results last week. Total revenue of $43 million declined 9% year-over-year, primarily reflecting the revised franchise fee structure implemented in April 2025. Given the 2Q26 anniversary of this change, the company believes the impact of the fee structure changes will ease.
Moreover, excluding the impact of fee revisions, pro forma revenue grew 11% year-over-year and pro forma EBITDA grew 17%. The company expects its margins to improve over time, in part reflecting the benefits of AI initiatives that are expected to improve the customer experience and boost efficiencies and cost optimization.
Clinic revenue grew 10% year-over-year, and same-clinic sales advanced 6% year-over-year. Net income attributable to SBC Medical Group was $11.3 million, or EPS of $0.11, versus $21.5 million and $0.21, respectively, in 1Q25. The prior year quarter included a one-time gain of $8.7 million related to life insurance surrender.
There were 284 franchise locations as of March 31, 2026, 33 more locations compared to March 31, 2025. Some 6.76 million customers visited SBC locations in the 12-months ended March 31, 2026, representing a 10% year-over-year increase. The repeat rate for customers who visited a franchisee clinic at least two times was 72%.
SBC implemented a number of measures in 2025 that appear to be lifting operating results and mirror organic growth, complemented by strategic M&A. For example, in April 2025, the company revised its franchise fee structure, as noted, to make it easier financially for franchisees to join its network and, as they ramp services and customer bases, pay fees based on a tiered fee system that aligns with the scale.
In addition, SBC launched a multi-brand strategy in aesthetic dermatology and other areas to address the increasingly diverse needs of its growing customer base to customize services across multiple brands, segment the market, develop new services, and garner more market share overall. For example, the company launched NEO Skin Clinic, targeting relatively frequent-visit customers who might otherwise travel outside Japan for the most current treatments. With that brand, the company introduced up-to-date medical devices, including advanced laser devices, and has successfully attracted high-literacy customers. SBC also acquired JUN CLINIC, a medical clinic group that focuses on customers who are relatively new to aesthetic medicine. The company intends to continue to promote its multi-brand strategy in the aesthetic dermatology field, expand its non-aesthetic medical business, and strengthen its international footprint. The company also believes the competitive environment of the Japanese and global aesthetic medical market is easing to an extent.
Increased focus on many non-aesthetic specialties
SBC has also increased its focus on many non-aesthetic specialties where it believes it has substantial opportunities to grow and gain more market share, including categories such as AGA and dentistry, which are experiencing momentum. Reflecting these and other changes and improved product mix, average revenue per customer visit has begun to recover and improve. The company expects efforts will continue to diversify revenue sources. SBC also sees international expansion, focused on the U.S. and Southeast Asia, as integral to creating long-term value. By 2027, the company expects to operate a significantly larger global footprint offering diversified medical services, with an emphasis on aesthetic medicine.
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