SBC Medical Group Holdings Incorporated

It is now the scheduled time. I'd like to begin today's session. Thank you very much for taking time out of your busy schedule to join the earning briefing of SBC Medical Group Holdings. Today, we will be presenting our third quarter financial results, business progress, and capital policy. At the bottom of your screen, you will find the question box. If you have any questions, please enter them briefly and concisely We will address them after the presentation. Now, I would like to hand the presentation over to our CFO, Mr. Yoshida. Mr. Yoshida, the floor is yours.

Good afternoon. I'm Yuya Yoshida, CFO of SBC Medical Group Boardings. Thank you very much for joining our conference call today despite your busy schedules. I will now walk you through our results for the third quarter the progress of our business and our capital policy. It's time on slide five. OK. First, regarding our franchisee clinic performance. We added the non-web clinic. to 258 clinics by 34 locations increase. And the annual number of customers continue to increase steadily and has now expanded to approximately 6.5 million. Next, please. I'm going to touch up on the ability to spend power for customers. The graph on the left shows the quarterly trend of average spend per customer. As you can see, thanks to initiatives such as pricing and promotion strategy optimization and our multi-brand strategy in the dermatology segment, which has successfully captured high spending customer groups, the overall average living per customer visit is clearly showing signs of recovery. We intend to sustain this positive trend by accurately capturing customer needs and continuing to provide high-quality, high-satisfaction services. Next, please. Next, financial performance for the third quarter. Sales had been affected by a restriction and a division to franchise fees. but have since bottomed out, supported by an increase in points-related revenues. Additionally, the decline in listing-related costs, including share-based compensation expenses, contributed to a tolerance in both operating income and net income. From here, we aim to place the company firmly back on a sustainable growth trajectory. Next, please. We are pleased to announce that our first step in entering into Thailand is through a partnership with BlazeAzure. We have entered into a consulting agreement with BlazeAzure Corporate Limited, a company with more than 10 years of experience on the network of over 25 mainly in Thailand, to provide laser treatment at affordable price. By deepening our collaboration with Space Asia, we will accelerate our full-scale entry into Thailand's rapidly growing aesthetic medical market. Next, please. Yes, regarding our initiative for Waku, Recently, we announced the commencement of a tender offer to acquire majority stake in Waku, which engages in R&D for regenerative medicine and skincare product with the goal of making it a subsidiary. By combining the strengths of both companies, we aim to enhance the speed and innovation of our R&D and expand new treatments, and unique service offerings in clinical areas such as AGA and orthopedics. Through this initiative, we seek to strengthen the group's overall competitiveness and achieve sustainable growth for both companies. Next, please. Next, I'm going to touch upon the balance sheet. We maintain our sound and robust financial views with sufficient cash and deposits. To further accelerate growth, building strong relationships with financial institutions is essential. Recently, we utilized bank financing for work and capital purposes. Our ample liquidity will continue to be actively deployed for strategic investments, including both organic growth and M&A in Japan and overseas. Finally, regarding our capital policy, we recognize that the liquidity of our shares is too low. making it difficult for many institutional investors to trade. To address this, we will work on improving supply and demand and pursue measures such as new share insurance and partial sales held by the founders. This will help create a more investment-friendly environment for a broader range of investors. That concludes my presentation. Thank you very much for your attention.

Thank you very much, Mr. Yoshida. So we will now move on to the Q1 session. Here is the first question. Why was COGS elaborated during Q3 2025? And when do you expect a franchise fee division impact to be clearly absorbed going forward? Thank you.

Okay, first of all, the main reason why the cost increased is the increase of medical equipment lease and, yeah, effects of consolidation of AHH that we acquired in Singapore, yeah. And, yeah, we've seen this, Yeah, we see our financial performance bottoming out of Q3, and we see this trend will continue throughout the last year. And yeah, although there is some uncertainty, but so far we are not seeing any major negative factors. So we want to keep the positive momentum that we saw in Q3 in the foreseeable future.

Thank you very much. So next question is, there are various balance sheet changes during the quarter, which expected impacted cash level during Q3 25. Could you elaborate these changes?

OK. Yeah, regarding the changes in balance sheet, first of all, we have borrowing. bank financing for working capital that I mentioned in the presentation. And second, we changed the payment term for the related parties in the last quarter. And third, the decrease of tax debt we just paid our mid-term income tax at the end of August. That's why these changes happened in Burma seed.

Thank you very much. So next is regarding the bread. Could you explain the expected impact of the new bread? and also the provides, how do you think about the SBC brand impact to the Thailand market?

Yes, we are pleased to announce this initiative in Thailand. Regarding the financial impact, in the near term, the impact will be not significant because We are trying some POC, proof of concept, in Thailand by providing the laser treatment to customers, not only Japanese, but also Thai people at affordable prices. But after we completed POC, we think we can expand the business into not only Thailand, but also other Asian countries, such as Malaysia or Indonesia. Yeah.

Thank you very much. And then next is, what is your expectation for organic growth going forward for both spring and revenue?

Again, yeah, we expect we can keep this positive momentum that we saw in Q3 because we basically completed pre-structure changes. So, but although, yeah, we completed our financial restrictions, somewhat the effect for the revenue and profit of SBC Accordings will be late a bit. So I think we expect more, stable financial performance in Q4 and next year.

Thank you very much. So next is regarding the WACU. Could you describe this strategic relational behind the acquiring WACU? And also, please show the outline of the integration roadmap for WACU. Okay.

Maybe all the people I mentioned, Mr. Sakaguchi, can touch upon this initiative.

Sure. This is Taichi Sakaguchi. I'm chief planning officer in SBC. Regarding WACU, actually, it's difficult to describe the real number about this WACU-TOB, but we believe believe that synergies can be realized through strengthening the sales of Waku products at SBC Clinic and jointly developing pharmaceutical and medical devices and outsourcing cell culture and processing operations to Waku, which currently we outsource to other companies. And we completed this operation within our group. And after completing this TOB, we will discuss with work management in detail on this, and we will clarify the number. This is what we are considering right now.

Basically, it's very important to combine work with R&D function and SBCs or clinics, franchising network. That's the most important thing. in this initiative.

Thank you very much. So next question is for Stephen. Can you comment on the relative status of your U.S. business development efforts?

Sure. Hi, Stephen here. I'm the head of global planning strategy and also leading SBC's market entry into the U.S. The way that we've been thinking about the U.S. strategy is looking at what we've developed in Japan, which is amazing, over the last 25 years, developing into the number one medical aesthetic clinic. We have to recognize that what we've built there, it's really hard to just copy and paste and move that into the U.S., where the market is very different. So at the moment, now we're in a phase of really getting smart about what's happening in the U.S., And we're looking for, you know, strong partners that we can work with that we can leverage a lot of the SBC learnings and strengths in Japan and that we can use in the US. You know, and at the same time, too, we're also looking at a lot of the cool things that are happening in terms of different treatments and technologies that are being introduced in the US and overseas that we could then potentially get first mover advantage back into Japan as well. And then we're also looking at a lot of different technologies too. You know, there's a lot of cool things happening there. So I would say right now we're really looking at companies where we can develop strong partnerships. I would say, you know, initially we're hesitant to just kind of copy and paste and start building, you know, our clinics now, but that could be in the future. And then once we start to feel more comfortable, I think we'll start to see a lot more growth and expansion in the U.S.

Thank you very much. So next question is probably, this is for Ichimori-san. Can you discuss your expectation for M&A going forward?

Can you hear me? Yeah. So going forward, so I think the amount of strategy is separated between domestic, which means Japanese, and global amount of strategy. So for domestic amount of strategy, I think we pursue, as we have done so far, to like medical, which is in the clinic field, acquisition as we have done so far. And also, we can also pursue more like not only aesthetic medical industry, but also more like medical clinical industry as well. And for global global perspective, we are going going into metal spark industry, which we are familiarized with. And also, but like I think we are we needed to study a little bit more in this industry and global perspective. So we may want to invest rather than a full acquisition, especially in the US industry. So I think that's the brief global strategy. I mean, I'm not as tired as you going forward. Much

So I'll direct you back to the financial matter. What do you mean by more stable financial performance in Q4 and 2026? Does this mean a return to revenue growth? And if so, could you provide any expectation for how much growth?

Yeah. The simple answer is yes. And unfortunately, at this moment, we cannot give you a concrete number of the revenue growth and the profit growth. Yes, we heard from our investors that they need kind of revenue guideline or profit guideline. So that we are considering actively. So yeah, we are thinking providing some financial guidance in the near future.

Thank you very much. So let's move to the capital matters. So regarding current liquidity situation, how do you think about how to improve the liquidity situation? Thank you.

Yeah, basically we want to increase the free fruit, free fruit sales. So as I mentioned in the presentation, we are considering the new issuance of shares or selling by our CEO-founded shares. Yeah, on top of that, we are considering the share buyback as well that we done in this year. Yes, given the weak share price. Yeah, we have to admit the current share price is too low. So we're considering the number of wages to talk with the share price.

Thank you very much. Do you think about the dividend going forward?

Yeah, dividend has been one of our options. We do see dividends as one of the effective way to attract new investors, especially retail investors. On the other hand, we believe there are still many multiple growth opportunities. We see very good pipelines in the M&A, not only domestically, but also globally. Our priority is to out-get capital through strategic initiative.

Thank you very much. So do you have any plan to disclose guidance, financial guidance or performance guidance going forward?

Yeah, that's what I just mentioned. We are considering that.

Thank you very much. So thank you very much. So I'd like to wrap up this session. Mr. Yoshida, do you have any wrap up message to the investors?

Yeah, again, thank you for joining this conference call. Yeah, we committed to provide sufficient information to our investors. Yeah, we hope our positive trend will continue in the near future. So, yeah, let's see.

Thank you very much. Thank you very much. So we'd like to wrap up today's earning brief session. Thank you very much for joining.