Initiatives include multi-brand strategy, revising franchisee fee structure & strategic pricing to drive customer repeat visits
SBC Medical Group Holdings (NASDAQ:SBC) which provides end-to-end solutions enabling aesthetics clinics to launch, expand and/or operate their businesses, maintained its growth strategy of adding franchise clinics throughout 2024. The number of clinics and customers the company served expanded to 251 partner clinics at December 31, 2024, an increase of 43 clinics compared to December 31, 2023. The number of customers served in 2024 reached 6.03 million, up 15% year-over-year and the repeat rate for customers who visited franchisee clinics more than once was 71%. Total revenue per customer was impacted by the strategic price initiatives designed to offset increased competition.
In Japan, demand for aesthetic medical treatments has grown in recent years, partially reflecting the impact of social media, with celebrities and influencers publicizing their own cosmetic procedures. Moreover, demographic trends including changes in the average age of the population, as well as lifestyle and other changes are also factors driving demand for aesthetic medical services. Younger and middle age people appear to be more interested in elective cosmetic procedures compared to older generations. Market dynamics have attracted new entrants and the growth in the number of clinics operating in the market has outpaced overall revenue expansion, making conditions more competitive.
Pricing strategies, adding new services, other measures…
Thus, challenges that the industry encountered in 2024 included intensifying competition and regulatory oversight, in part due to concerns around the expansion of the aesthetic medical business and increase in challenges in the hair removal niche, as well as negative repercussions around a major competitor existing the market in what the Japan Times terms “Japan’s biggest beauty collapse.” The newspaper notes that bankruptcies in the sector reached “record levels” in 2024.
… including boosting social media outreach to attract customers from other markets
The company believes it is offsetting many of these challenges and that its pricing strategy and strong market position can enable it to successfully advance its goal is to continue expanding its footprint domestically, as well as internationally and into new services. For example, while SBC expects to maintain some level of discounting on certain services in order to remain competitive, the company intends to raise prices on medical hair removal services, as that market consolidates. Moreover, with a growing number of men increasingly interested in aesthetic procedures – particularly for hair replenishment – the company is optimistic that this represents a source of growth for SBC.
…while multi-brand strategy designed to expand target market
SBC expects to maintain a multi-branded approach to expanding and operating its footprint. For instance, towards this initiative, SBC’s affiliated Shonan Beauty Clinic operation intends open SBC NEO Skin Clinic Ebisu next month, under a new brand designed to make aesthetic treatments more affordable to broader groups of the population, including people who previously sought treatment abroad, particularly in South Korea, by providing comparable skincare solutions domestically. This new brand represents a strategic shift from conventional surgical aesthetic procedures to non-invasive dermatological treatments.
Moreover, as the population ages, SBC sees new services such as orthopedics as additional expected growth drivers. At the same time, increasing medical tourism from Chinese and other customers could be another expected growth area. The company is enhancing multilingual support to be responsive to medical tourism from China and other countries and also using Chinese social media as an outreach tool to accelerate customer acquisition.
SBC intends to maintain strategic pricing and other initiatives in order to maintain its strong market position. The company plans to revise its franchise fee structure beginning in April 2025 to make it financially easier for franchisees and to introduce a tiered fee system that aligns with the scale, as well as the consulting services SBC provides. The company expects the impact on total revenues and operations to be offset by the absence of one-time losses it recorded in 2024, such as impairment loss and stock-based compensation.
Growing demand for services from men, women beyond core age group
While women continue to be the core customer base, demand from the male demographic is growing, as well. For example, demand among men for procedures related to hair replacement and other services has been on the rise. Significant growth is expected from the middle-aged female and male markets. Moreover, overall market penetration for these procedures is still relatively low in Japan, implying upside if demand continues to rise, as expected.
International footprint has grown, with further expansion targeted
Other recent steps the company has taken to support its growth strategy in addition include divesting non-core subsidiaries to focus on the core business, discounting to compete amid increased competition, introducing SBC Wellness to enable corporate clients to augment their employee benefits programs, acquiring bitcoin and international growth. SBC acquired Aesthetic Healthcare Holdings Pte. (AHH) aesthetic clinics in Singapore recently. SBC’s goal is to expand and diversify its revenue streams.
Currently, in addition to its operations in Japan, SBC also owns and operates treatment centers in Ho Chi Minh City, Vietnam and in California and now with the recent acquisition of Singapore-based AHH, in Singapore. AHH owns and operates several brands that provide aesthetic medical treatments, including family clinics, and quick facial aesthetics outlets. SBC is encouraged by its results at its international operations and intends to expand further in these and potentially additional Asian markets.
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