SBC Medical Group Holdings Reports 6.13% Revenue Growth and 18.4% Increase in Net Income for Fiscal Year 2024

SBC Medical Group Holdings Incorporated (SBC Holdings), formerly Pono Capital Two, Inc., filed its 10-K report for the fiscal year ended December 31, 2024, detailing its financial performance and significant developments. The company reported total revenues of $205.4 million, a 6.13% increase from $193.5 million in 2023. Net income attributable to SBC Holdings was $46.6 million, up 18.4% from $39.4 million in the prior year. Cash flow from operating activities decreased to $20.6 million in 2024, compared to $50.7 million in 2023. The company attributed the decrease in operating cash flow to changes in several accounts, including notes payable and accounts payable.

Significant changes in revenue streams contributed to the overall financial performance. Franchising revenue increased by 44.96% to $61 million, primarily due to a change in billing methodology and an increase in the number of clinics. Conversely, management services revenue decreased by 26.52% to $53.1 million, mainly due to the discontinuation of certain staff support services and a decline in loyalty program revenue. Rental services revenue, however, saw a substantial increase of 120.01% to $16.1 million, reflecting increased demand for medical equipment.

During the fiscal year, SBC Holdings completed the acquisition of Aesthetic Healthcare Holdings (AHH) and its subsidiaries in Singapore for approximately $5.8 million. The company also divested its subsidiaries Kijimadairakanko Inc. and Skynet Academy Co., Ltd., receiving a total cash consideration of $446,460 for Skynet and $0 for Kijima. The company stated that these transactions were undertaken to focus resources on its core medical business. In November 2024, the company acquired 100% equity interest in AHH, a Singapore-based medical aesthetics company, for SGD$7.8 million (approximately US$5.8 million).

The company's operational developments included providing management services to 241 franchisee treatment centers in Japan, one in Vietnam, and one in the United States. The company also reported having approximately 863 employees globally as of the end of the reporting period. The company highlighted its customer loyalty program, noting that over 6 million customers were served globally in 2024, with a repeat customer rate exceeding 71% among its Japanese franchisees. The company also detailed its extensive intellectual property portfolio, including numerous patent applications and registered trademarks in Japan and Singapore.

SBC Holdings acknowledged several material weaknesses in its internal control over financial reporting, primarily stemming from a misappropriation of funds discovered in 2024. The company detailed a remediation plan to address these weaknesses, including organizational restructuring, improved communication, and enhanced monitoring activities. The company also noted several risk factors, including competition, economic conditions, regulatory changes, and the potential for future capital needs. The company stated that it does not anticipate paying cash dividends in the foreseeable future.