SBC

Later, we will begin with the presentation delivered by AI avatar. The content has been reviewed and approved by management in advance. After the presentation, we will move on to the Q&A session. To submit a question, please click the Q&A icon at the bottom of your screen. Type in your question and send it to us. Now, let us begin the presentation.

I am Yoshida, CFO of SBC Medical Group Holdings. Thank you very much for joining our conference call today, despite your busy schedules. I will now present our financial results for the first quarter of 2026. First, let me cover the clinic highlights. Both the number of customers and average revenue per visit increased year-over-year, and total revenue rose accordingly, including same clinic revenue. We will continue to enhance service levels through our multi-brand strategy, which enables us to address diverse customer needs with precision, as well as through the development of new services. Next, the consolidated income statement. Total revenues for the first quarter of 2026 were $43 million.

While this represents a 9% year-over-year decline, the primary driver was the fee structure revisions that took effect in April of last year, which had a negative impact of $6.2 million on franchising revenue and $2.4 million on management services revenue, totaling a $8.7 million decrease. In addition, procurement revenue and rental services revenue declined year-over-year. On the other hand, management services revenue was offset by an increase in point revenue. Please also note that net income attributable to SBC Medical Group declined year-over-year, partly because the prior year quarter included a one-time life insurance surrender gain of $8.7 million. As I mentioned, the revenue decline was primarily attributable to the fee structure revisions.

Excluding the fee structure revisions of $8.7 million and further adjusting for the $1.3 million difference in AHH consolidation period, underlying revenue grew +11% year-over-year. Similarly, excluding the fee structure revisions of $8.7 million, underlying EBITDA grew +17% year-over-year. While the headline figures show a decline in both revenue and profit, I would like to emphasize that excluding the impact of the fee structure revisions from the prior year, both revenue and EBITDA demonstrated solid underlying growth. That concludes my presentation. Thank you for your attention.

We will now move on to the Q&A session. To submit a question, please click the Q&A icon at the bottom of your screen. Type your question and send it to us. First question is regarding clinic revenue growth and the competitive environment. Clinic revenue grew significantly year-over-year this quarter, including same clinic sales. Do you view this as a sign that the competitive environment has started to normalize?

Okay. I'll answer the question. Overall, I think yes. We do feel that the competitive environment of Japanese and the global aesthetic market has eased to some extent compared to where it was previously. Our domestic clinic operations are performing well. We are expanding our customer base while maintaining a consistently high repeat customer ratio. The average customer ticket, average revenue per customer, has also begun to recover. Our priority is to further strengthen customer trust and capture the underlying growth of the market. On top of that, we are also seeing a meaningful momentum in non-aesthetic categories such as AGA and dentistry. We see these as the adjacent area as promising growth domains. We intend to invest in scaling them in parallel.

Yes, thank you very much. Next question is regarding the fee structure. With the Q1 2026 QoQ plus 9% revenue growth, is the impact of early 2025 pricing market adjustment now over?

Mm-hmm. Yeah. Basically, I think yes. We basically view fiscal year 2025 last year as a transitional year that put the company on a healthier footing. We are seeing a reported revenue decline due to restructuring and fee structure changes. As you can see now, our profitability improved, and the overall earnings base became more normalized. In that sense, yes, you are right. We think the impact of fee structure is kind of now over.

Thank you very much. Again, about the financial situation. Excluding the impact of the fee structure revision, implemented last year, your top line in first quarter is growing. Looking ahead, do you see this positive trend continuing?

Yeah, as you pointed out, our QoQ revenue increase is very promising. As we explained, our clinic operation, underlying clinic operation are performing well. As the underlying activity accelerate our top line, naturally the accelerate is a function that structures linkage. There will of course be some kind of variability or seasonal changes, but on a smoother basis, we are confident that in the overall direction from here. We expect the underlying growth profile of the business to become more visible as the year progresses and the YoY impact of the last year's fee structure revision lowers off.

Thank you very much. Next question is regarding the gross margin. Gross margin was lower than expected in first quarter 2026, through offset by lower SG&A. What level of gross margin and operating margin do you expect throughout the rest of the 2026 hereafter?

Basically we are considering the margin will be stable and will be improved over the time. As we explained in our last presentation, we are now promoting the AI initiative to deliver the two benefit. One is top line growth, by improving our customer experiences. Also, second one is enabling us to build a linear, more efficient organization on the cost side. There will be some. Over the medium to long term, our intention to improve our profitability. In that sense, over the year, we'll expect our margin will be stable and improved.

Thank you very much. Next question is regarding the cash position. You have a substantial cash position on the balance sheet. How are you thinking about the deployment of the cash going forward?

Yeah. Thanks for a very good question. Obviously as we continuously iterate to this point, growth investment is top our priority. We will continue to invest with discipline to build a more competitive group of businesses because basically number of clinics that we are supporting is a kind of a KPI for our revenue and profit. Now, we are very fortunate to be seeing a steady inflow of potential very great M&A opportunities because of intense competition in the, especially in the Japanese aesthetic medical market. I think the benefit from the inorganic M&A opportunities over the this year and the next year will be very promising, I think.

Thank you very much. Let me back to our clinic situation again. Have you seen any measurable improvement in franchisee profitability, retention or unit economics following the fee structure change?

Can you say that again? Sorry.

Sorry. Sorry. Have you seen any measurable improvement in franchisee profitability?

Oh.

Unit economics, following the fee structure changes?

Basically, regardless of our fee structure changes, our, you know, clinic performance and our clinic's profitability remains very good. The purpose of the fee structure was to enable our clinics groups to open more new types of clinics. In that sense, as you can see, number of clinics are growing steadily over this quarter again. I think the effect of the fee structure change made a good effect on our clinic level profitability.

Thank you very much. Next question is, this is a slightly long questions. Talk Bridge is now deployed across all Shonan Beauty Clinic locations with a in-house interpretation center scaling towards 800+ sessions per month. What inbound KPIs should investor track? Visit volume, conversions, conversation from the English inquiry pipeline per visit, spending differential versus domestic, and how is the higher spent inbound mix flowing through the revenue per visit. The first full quarter of the partnership are complete. Can you provide the general operational update on the collaboration?

More importantly, what the potential for the bilateral cross-border deployment, bringing OrangeTwist location as into Asia through SBC's network and deploying SBC plans or the operating model in the U.S. through OrangeTwist footprint? And what's the timeline for that bilateral expansion?

Okay. Let me put it this way. As for the first part of the question regarding the basically inbound customers for SBC Medical Group, actually, we don't have a concrete number here today. I think we'll include the information and the intelligence of the inbound customers' data next time. From the revenue perspective, the ratio of the inbound tourist revenue is still very relatively small, but our growth rate is very big now. We see very great growth opportunities. We are implementing a variety of measures.

For example, we had a kind of a conference that invited one of our doctors to China and to have a Chinese customer in the mainland China to explain our expertise in the treatment. That sort of initiative is working well. With that, the number of our inbound customers are increasing. As for the second part of the question regarding our partnership, especially for the U.S. strategy, as you pointed out, our U.S. strategy is basically centered on building value through our collaboration with OrangeTwist rather than pursuing a large-scale standalone expansion from them. As you mentioned, our initiative includes collaboration, a variety of collaboration, that consists three parts, basically. First is marketing support.

We see meaningful room to improve customer acquisition, retention and overall brand execution at OrangeTwist. Part of our focus is helping the brand awareness and acquiring new customers. The second one is AI implementation support. We see they have a very, how can I say, potential to improve their cost by utilizing the AI. The third one is our longevity clinics proof of concept. Now we are planning and considering implementing longevity treatment in a selected location of OrangeTwist med spa. Yeah, as you mentioned, our collaboration idea includes the OrangeTwist, how can I say, exporting OrangeTwist med spa business clinic group to Asia globally.

At this moment, we don't have a concrete timeline. Because as I explained, now we are focusing on three collaboration items now. In the long term, we think we are considering the importing the OrangeTwist brand to Asian countries or even Japan, maybe.

Thank you very much. Next one is also the global businesses. Can you talk about U.S. M&A valuations and whether you see near-term opportunities for strategic transactions?

Yeah. I think, as you know, compared with the valuation in the Japanese M&A market, the valuation in the U.S. is relatively expensive. From the EBITDA multiple perspective or basically over 5x and sometimes over 10x. Basically, we think it's reasonable to acquire the med spa group, potentially, I mean, with the EBITDA multiple over from the 5x to 8x.

Thank you very much. Next one is also international businesses. Overseas remains 1% of clinic revenue with a Phase 2 roadmap targeting the U.S. and Southeast Asia for 2027 to 2028. Beyond OrangeTwist, which Southeast Asian market are highly priority? What's the preferred mode of entry? Direct to operation, joint venture, franchise, medical tourism partnership, and when should investor expect overseas to become more meaningful contributor to consolidated revenue?

Yeah, thank you for a very good question. Actually, we think kind of partnership with OrangeTwist could be the, you know, model as to how to expand our business into the global, including Southeast Asia. Partnership model could be the one of the prioritized approach to dig into Southeast Asia because, you know, especially aesthetic medical market is a very domestic and, how can I say, affected by the each culture and the customer's preference. That's why we need professionals and expert who knows much about the local market. In that sense, partnership model would be the would be better rather than, you know, with deploying the large scale, standalone expansion.

Yeah, that's what we are currently considering. As, you know, depending on the inorganic M&A opportunities, we are very open to direct M&A and having the direct medical clinics group in Southeast Asia. It depends on the situation.

Thank you very much. Could you discuss trend in average spend per customer and whether pricing optimization continue to support ARPU and growth?

Yes, as we explained in the last couple of earning release, you know, we saw the very intense competition in the Japanese aesthetic medical market. That's why we are very strategically changed our price of our treatment by treatment basis. As we explained, we think it hit the bottom and we are now kind of enjoying the, how can I say, benefit of survivors. As our largest aesthetic medical clinic group, we are kind of power to control the overall price of the treatment now. Of course, we need to care about the customer satisfaction. That's our first priority. We increase the price of some treatment gradually.

The even with that, the, as you can see, the number of customer increasing. That's why, we successfully improving our, average revenue per visit and, profitability.

Thank you very much. Can you elaborate on how the multi-branding strategy is evolving and whether a newer brand attracting different demographic or price point segments?

Hmm. Yes. As you pointed out, yeah, we are implementing a multi-brand branding strategy. For example, we opened a NEO Skin Clinic that are focusing the more customers with high literacy of aesthetic medical and especially those who want to go to Korea to take the up-to-date treatment. With that, we introduced the up-to-date medical device, including the laser devices. Yeah, with that, with those efforts, we are successfully attracting customers with high literacy of the aesthetic medical. Yeah, that's sort of the initiative are currently working. Not only the NEO Skin Clinic, we acquired a medical clinic groups called JUN CLINIC that focuses on more, how can I say, non, how can I say?

With low medical aesthetic literacy, actually. On the other hand, on the contrary to the NEO Skin Clinic. That's how the multi-branding, branding strategy works very well to capture the diverse customer needs, as I explained.

Thank you very much. This is profitability questions. As you continue to roll out AI across the organization, is it fair to assume that the EBITDA margin is on the upward trajectory from here?

Yeah. Short answer is yes. Due to the nature of aesthetic medical clinics group, our business is basically kind of labor intensive business model until so far. We believe AI has meaningful potential to improve our productivity and reduce operating cost over time. More concretely, our priority is to start with areas where implementation is relatively simple and the return can be verified quickly. It's a kind of quick win project. For example, we see internal manual research as a short-term quick win because actually we have a wide variety of treatment to capture customer needs. In that sense, we have lots of internal manuals. From the counselor or nurse perspective, it's difficult to find the appropriate manual by their hand.

In that sense, we can utilize AI. More broadly, we have already taken a disciplined approach to hiring at headquarters, including the principle-based pause on some mid-career hiring. With that, you know, from the cost reduction perspective, we also believe there's substantial room to streamline operations through automation and workflow redesign over time. Yeah, in a short answer, yes, we can reduce our cost and improve margin.

Thank you very much. Next question is regarding the cash. Share buyback. You established a share repurchase program at the end of last year.

Could you share your thinking on how you plan to utilize this program going forward?

Okay. I think we cannot concretely tell what we're gonna do in the next build. From our point of view, we believe the situation has drastically improved compared to where we were previously, I mean, when we established the share repurchase program, as I explained and, as you can see, our revenue increased. I mean, the underlying revenue increased, and our profitability remains improving. From our point of view, our priority is to improve our liquidity. In that sense, a share repurchase program, by its nature, reduces the float. That's what some investors pointed out to us, and we duly understand that point.

We do not view it, I mean the share repurchase program, as a high priority tool at this stage. Instead, we plan to continue working on liquidity through expanding analyst coverage, building our institutional investor base, and pursuing proactive IR engagement and so on. We do everything to improve our liquidity and increasing our float. That's all, that's what we're concentrating now.

Thank you very much. Next question is also the capital strategy. Do you envision additional founder share sales in 2026? If so, what size and timing?

Yeah. Actually, you know, selling the founder's portion is a decision should be made by our founder, basically. It's like a basic concept. Even with that, as I just explained, increasing our liquidity and the number of floating shares is our top priority. In that sense, we are very open to any idea to contribute to increase our floating shares and our liquidity. I think that's what we can say now.

Thank you very much. Yeah, are there any further questions? If not, we conclude our Q&A session.

Yeah. Thanks, thanks for joining us, and thanks for giving the very great questions. Again, we are very committed to improve our liquidity and the floating shares and improving our profitability. As you can see, the very big improvement of QoQ basis now. Really look forward to discussing with you again in the near future. Thanks so much.

Thank you very much. This concludes today's briefing. Thank you again, and have a wonderful day. Thank you very much.

Goodbye.

Goodbye.

Results briefing call. This meeting will be led by CEO Yoshiyuki Aikawa, Executive Vice President, CFO, COO, and AI Evangelist Yuya Yoshida, and myself, IR Manager Fukui, who will be moderating today. Thank you for your cooperation in advance. Here is today's program. As a new initiative, we will begin with a 10-minute presentation by an AI avatar. Please rest assured that the content has been reviewed in advance. Following that, Aikawa will deliver a message, and then we will move on to a Q&A session. Please click the Q&A icon at the bottom of the screen, enter your message, and submit it. Now, let's begin the presentation.

Good day, everyone, and thank you for joining SBC Medical Group Holdings conference call. My name is Yoshiyuki Aikawa, CEO of SBC Medical Group Holdings. Today, I will walk you through our performance for the fourth quarter and full year of fiscal 2025, followed by an update on our business strategy and capital policy. Let me begin with highlights from our clinic operations. As of the end of December 2025, we were operating 283 locations, and the number of customers served over the trailing 12 months reached $6.63 million. While same-store sales were slightly below the prior year, total clinic revenue for the full year reached $1,163 million, representing 2% year-over-year growth.

Most encouragingly, average revenue per customer, which had been on a declining trend, rebounded significantly in the fourth quarter, reaching $316, an 11% increase year-over-year. We are now seeing both customer growth and improving unit economics moving in the same direction, which we view as a meaningful positive for the business going forward. Turning to the charts, average revenue per visit has been recovering steadily on a quarterly basis, and total clinic revenue has begun to reflect that same upward trajectory. We are seeing genuine momentum in the underlying trend, and if this continues, we believe it will mark an important inflection point for the company's long-term growth. Next, let me highlight key developments across our business in fiscal 2025. In our domestic core operations, we made meaningful progress on several fronts.

Recovery in customer spending, continued expansion of our dermatology customer base, the establishment of the largest AGA hair loss treatment network in Japan, and further expansion in orthopedics and fertility treatment. We also strengthened our domestic platform through a series of additions. The opening of NEO Skin Clinic and Hadano Aozora Clinic, the joining of JUN CLINIC, and the consolidation of Waqoo through a tender offer. These developments further expand our long-term growth foundation. Internationally, while still in the early stages, we made concrete progress by making a strategic investment in OrangeTwist in the United States and forming a partnership with BLEZ in Thailand, our first tangible steps toward a broader global presence. Moving on to our financial highlights. Let me walk you through our full year 2025 performance. Full year revenue came in at $174 million, a decrease of 15% from the prior year.

This was primarily driven by the business restructuring initiatives we undertook throughout 2024, as well as the impact of the fee structure changes implemented in April 2025. Net income attributable to our shareholders, however, grew 9% year-over-year to $51 million, and EPS increased 4% to $0.50. The key driver behind this improvement is straightforward. In the prior year, we incurred significant one-time costs associated with our listing process and asset revaluations. Those costs did not recur this year, bringing our cost structure back to a normalized level. EBITDA was $70 million with an EBITDA margin of 40.4%. We continue to maintain a strong level of profitability, and we believe the underlying earnings power of our business remains healthy.

In summary, while revenue reflected the impact of our structural transition, our cost structure has normalized and our profitability metrics have improved. That is the defining story of fiscal year 2025. Let me now turn to our strategy. Our core strategic pillars remain unchanged: aesthetic dermatology, non-aesthetic healthcare, and global expansion. We are, however, introducing two unifying themes across these pillars: longevity and AI-driven healthcare. Our goal is to build a healthcare platform that supports people in living longer, healthier, and more vibrant lives, bringing together aesthetic medicine and broader healthcare services under one roof. To execute on our longevity strategy, we are launching SBC Wellness 2.0, an upgraded corporate wellness platform in Japan. Inspired by leading models in the United States, this platform will integrate biomarker analysis, AI-powered body diagnostics, personalized AI recommendations, and continuous health coaching.

By offering this through corporate benefits programs, we can scale our customer base efficiently while keeping marketing costs low. Our goal is to create an entirely new category of performance medicine. This initiative positions us to establish early leadership in Japan's emerging longevity market. The model combines recurring subscription revenue with high-margin individual medical services, while the accumulation of medical data and evidence will further sharpen our AI capabilities over time. With our nationwide clinic network and breadth of medical services, SBC is uniquely placed to deliver a truly comprehensive platform in this space. In dermatology, our multi-brand strategy is becoming increasingly important. As customer needs grow more segmented, no single brand can capture the full range of demand. By positioning multiple brands across different customer profiles and enabling referrals within the group, we can maximize lifetime value per customer.

We also believe that formats such as NEO Skin Clinic, which focus on aesthetic dermatology, have relatively low cultural dependency, making them well-suited for future international expansion. Our newer brands are off to a strong start. NEO Skin Clinic is building revenue steadily in the premium segment, while JUN CLINIC is attracting highly beauty-conscious customers. Through targeted segmentation and thoughtful brand positioning, we aim to capture demand across multiple customer profiles and continue expanding horizontally. Expanding into non-aesthetic healthcare is a key strategy for both revenue diversification and long-term growth. Our competitive edge here draws directly on capabilities developed in aesthetic medicine, advanced marketing and CRM, standardized clinic operations, and service models that integrate both private pay and insurance-based care. We intend to apply these strengths across additional medical fields. Our AGA hair loss treatment network has grown to become one of the largest in Japan.

We are also expanding in orthopedics and fertility treatment, with new clinics opening in both areas. Going forward, we will accelerate growth through a combination of organic expansion and targeted M&A, focusing on fields where our operational strengths can deliver the greatest impact. Our global expansion strategy starts from a stable and profitable domestic base in Japan. From there, we are focused on building a strong operating platform in the United States and exploring regional expansion and B2B healthcare opportunities across Asia. Our approach is deliberate. Partner with trusted local operators, identify winning models in each market, and scale selectively from there. In the United States, we are growing our med spa business through our strategic investment in OrangeTwist. By combining SBC's high-efficiency clinic model with OrangeTwist's premium experience and strong local management, we aim to accelerate new clinic openings and expand into longevity-related services.

Longer term, we also see opportunities to bring successful models back to Japan and other Asian markets. In Southeast Asia, we will leverage Japan's geographic proximity and strong brand recognition. Given a market structure dominated by smaller clinics, we see significant B2B healthcare opportunities in product distribution, service partnerships, and beyond. We will evaluate opportunities country by country and scale where we find a clear competitive edge. AI is a foundational pillar supporting both growth and efficiency across the organization. By converting our extensive clinical, customer, and operational data into AI learning assets, we aim to build a competitive moat that is genuinely difficult to replicate. AI will enable more precise recommendations, a better customer experience, and a more efficient operating model. We are deploying AI across multiple areas. Automated booking and inquiry handling, AI-assisted counseling, 24-hour AI concierge services, and optimization of headquarters functions.

By redesigning the customer journey end to end, we aim to drive revenue growth while improving scalability and reducing structural costs. Finally, let me touch on our capital allocation policy. Our fundamental approach is to prioritize growth investments, both domestically and internationally, as the foundation of everything we do while maximizing shareholder value. Within that framework, we will also address liquidity improvements and shareholder returns as important complementary themes, evaluating them with flexibility and disclosing updates in a timely and transparent manner. Thank you very much for your attention.

Thank you very much. Next, we will hear a message from Aikawa, CEO. We look forward to hearing from you now. I think you are muted.

Hello, everyone, and thank you very much for gathering and participating in this conference call out of your busy schedule. My name is Aikawa. I am a CEO of this company. As has been introduced or explained in the presentation, the aesthetic medicine clinic was established by our team, and SBC clinics have continued to grow. In 25 years, in 2025, the growth rate hasn't been very strong for the first time in our history. Now recently, since the latter half of last year, we started to see the recovery into this year as well. We still continue to see strong growth continuing into this year.

Now going back to the growth trajectory that we used to have before the slow growth period, and we have seen that, and we have felt a strong performance in the aesthetic medicine as well. The aesthetic dermatology has been growing steadily in Japan, and the growth rate has been almost at 10% for the entire market every year. We are trying to achieve above the market growth rate in the aesthetic medicine area. We would like to continue to grow this business going forward. Other than that, we are engaged in the orthopedics and dermatology and dentistry and the fertility treatment area, for both the insurance-based care as well as the private pay care in combination in some of these areas. In those areas, we would like to be number one in Japan.

Currently in Japan, the population is aging and now JPY 48 trillion is being spent per year for medical expenditures. There is such a huge market. For some time, we believe that the growth can continue in this JPY 48 trillion domestic Japanese market if we can take at least 10% of the market. I believe that the aesthetic medicine area is continuing to grow. Therefore, we would like to continue to grow in this market as well. Our strategy, we entered into the aesthetic surgery, and also we were listed on the Nasdaq market compared to other general medical organizations. We believe that we have been able to gather many excellent talents.

That's what I have felt in terms of the marketing capabilities as well as capabilities in the financials. Compared to other medical institutions, we believe that strong performers in our institutions. Therefore, we believe that if we expand our business scope into the general or non-aesthetic areas, we believe that we can continue to be competitive. As I said earlier, dentistry and orthopedics and fertility treatment and the general dermatology, we believe that there is still untapped huge market in Japan. Therefore, we believe that we will be able to continue in these areas as well. At least by 2035, currently we are engaged in the aesthetic surgery, aesthetic dermatology and AGA. We have gained a number one position in Japanese market, but for other areas such as dentistry and orthopedics and fertility treatment and dermatology as well.

In nine years, up until 2035, we aim at gaining number one position in Japanese market. This is how we are struggling and working very hard toward that goal. That's the end of my message. Thank you very much.

Aikawa, our CEO, thank you very much. We now would like to move on to Q&A session. At the bottom of the screen, there is a Q&A icon, so please click that icon and enter your message and send it to us. First, the healthcare currently in Japan aesthetic medicine market, what's the current status? Please elaborate.

As I mentioned a bit earlier, every year aesthetic dermatology is growing by 10% every year. Aesthetic surgery is growing about 3% every year. As a market, aesthetic dermatology has a bigger market. In our performance, Aesthetic dermatology 70%, Aesthetic surgery 30%. That's the ratio between the two. We are focusing on Aesthetic dermatology field, so we'd like to get on the bandwagon to increase the growth going forward.

Thank you very much. Next, regarding the SBC Wellness business. SBC Wellness for fiscal year 2026, do you think this is going to be the driver for the growth. Also, could you please give us your thought on the margin or profitability?

All right. Yoshida is going to respond.

In fiscal year 2026, frankly speaking, this is not considered to be a large driver for revenue, but rather the objective is through this wellness longevity, including the aesthetic medicine and customers who will become the users of SBC's first services. We are aiming at expanding the customer base first so that the new customers will have a good exposure with SBC's services. Therefore, I think that it is still premature to mention any revenue target for this business.

Thank you very much. If I may add regarding this system for the wellness business, once the more companies which are becoming our users of our services, and then that means that it will increase the users, whom we are going to be approaching. Currently, the number is how many?

For the number of customers for wellness, with 160 companies, 50,000 individuals. With the 160 companies and the 50,000 individuals are the ones who are able to make approach. We can access this through this route. The more companies who join our service network and then the cost for marketing can be reduced more, and that means that we'll be able to have a long-standing relationship with these individuals. Lifestyle-related services can be offered to them as well in an increasing manner. We are sure that in five or 10 years, this is the strategy for this, for the future, we'd like to grow this business.

Next, another question about wellness. I'd like to have a clearer image about services using the existing clinics to deploy the services. Or are you going to set up the specialized clinics to expand? What's your image?

At the clinic level, how we are going to roll out our services, we are trying to develop a strategy right now, and the rollout in Japan at specialized clinic is one possibility. In the United States, we have a stake in the OrangeTwist with their executives. How to enter into the longevity market is now under discussion with them. OrangeTwist channel might be utilized to have the longevity market or business in the United States to have experiments at other clinics there. Thank you very much. As a treatment, each company and staff members' health and productivity hopefully would be increased. That's the strong wish. For us, testosterone hormonal treatment, for example, can be offered, and then staff can be motivated, and we can increase their productivity. That can be great for our corporate customers as well.

Thank you very much. Next question is about AI. The new CTO has joined your team, and you are promoting the policies related to AI. Going forward, what kind of operational improvement do you expect or how this technology can lead to the enhanced revenue?

On this page that you are seeing, there are three main channels. First one is related to the headquarters enhancing efficiency, and another is call center. Currently, humans are receiving phone calls, and that will be automated. Furthermore, in the field of clinics, there will be numerical impacts because there are so many people who are working in these clinics. Therefore, we needed to improve the operation in clinics. These are the three approaches for which we are currently preparing products. This year at SBC, we would like to create the success cases. That is the focus of us next year. From next year onward, we will be considering the external sales of these technologies.

Shao, our CTO, has been hired, and he has the experience of the automation of the call center with AI and also mission critical system have been updated by him. Utilizing that experience, the SBC's technology capability will be enhanced by him. Thank you.

Next, M&A is the topic of the next question. In the future M&A strategy, what the company is considering?

Regarding M&A, by 2035, we'd like to get the number one position in Japan in dentistry, orthopedics, fertility treatment, and dermatology. If there is a good deal, we'd like to engage in M&A and in aesthetic medicine as well. The patient's needs are diversifying these days. LVMH and European brands can be utilized to address this.

Also in aesthetic medicine, if there's a good deal, we'd like to engage in M&A actively, if I may add, also overseas, focusing on B2B. We have a growth strategy there. Like OrangeTwist, we can make investments and leverage M&A according to assumptions. Thank you very much.

Next is the question about America. In December last year, minority investment was made into OrangeTwist. As a next step, what kind of next steps do you have in your mind? Expansion of the locations, do you think will come?

Regarding the OrangeTwist, together with the people in the field, since we have made investment into that, and the first meeting was held last month with people in the field, and we could learn a lot. We believe that we have things that we are able to offer to them regarding experience in the aesthetic medicine and expertise will be shared with OrangeTwist. OrangeTwist is also number one in the group to be in the U.S. market. That is the objective for OrangeTwist. Let me add to what Aikawa CEO mentioned. I believe that there are three things to mention. First, it's SBC's marketing know-hows and expertise in these areas will be utilized.

Another is, as we discussed earlier, regarding the new wellness or longevity market. Together with OrangeTwist, we are going to try to enter into these markets. A third one is regarding the use of AI technologies. We believe that there is still much room for cost reduction at OrangeTwist. The strengths of OrangeTwist is the high premium value and of experience by customers. Once they go to visit and seek the service by OrangeTwist, they will be intrigued by it. Still there are human labor involved, therefore, if we can optimize that, we will be able to enhance the profitability, therefore it will lead to the win-win between SBC and OrangeTwist.

Another question about OrangeTwist. Into the future, collaboration in business, Asian markets and the entry into the Japanese market, are those under consideration?

Right. OrangeTwist brand, how much we can grow the OrangeTwist brand, so it will depend on that. Recently, similar services are being offered by clinics more often, so OrangeTwist branding hopefully can be focused on so that it can grow as a brand accepted globally. We'd like to roll it out in Asia and also in Japan.

Thank you very much. Next question is about medical tourism. Going forward, for example, in Cancún, in Mexico, do you consider any potential medical tourism related business? For example, fertility treatment, have you considered any potential business there?

For now, from Mexico to Japan for medical tourism to get them fertility treatment, we do not have any plan on this. Technologies in the field of fertility treatment in Japan is said to have the cutting-edge top level technologies in Asia. Asia is expected to have more and more population growing, therefore, for Asia market, we may be able to receive medical tourists for fertility treatment.

Next is a financial question. The company has a lot of cash, so, I have a question on that. The company has a lot of cash and interest seems to be a small amount. Any comment on this?

Yoshida would like to respond.

In principle, we are having a safe investment, so they have yen deposits, so the interest revenue is limited. We have abundant cash, so we can use it to invest to enjoy returns. That's one possible approach. As Aikawa, CEO said, in Japan we'd like to become the number one position. In drawing a growth strategy, there are more attractive M&A opportunities, so more liquid and safer investments can be used by having cash so that we can use the money for M&A flexibly.

As Yoshida mentioned, we have a strategy to proceed with M&A actively. That's considered important, so as soon as possible we'd like to have cash. That's why we are taking this kind of a strategy. Thank you very much.

Next is for fiscal year 2026, various measures are going to be taken for investment into new business areas. What size of the investment do you have in your mind?

For M&A, which are going to be our main areas of investment, it will depend on the opportunity and also it depends on the scale or size of the counterpart. It will determine the size of investment. If there are good opportunities, and then cash plus some borrowings in order to achieve the M&A.

If I may add, of course, for the growth of our business, we will be aggressively making investments, proactively making investment. In order to support such a growth or potential, we need to have the good capability of generating cash, of course, through growing the business itself and a growth strategy is necessary. As I said earlier, AI utilization. Even if the size and number of AI clinics is increasing, costs will not be expanded, or rather we will be able to optimize the cost structure so that we can optimize the cost. That is the area we are aiming at.

Thank you very much. In December last year, a share buyback program was approved, and what's your view on this program?

May I?

Yes.

Share Buyback Program was set. In principle, for the developments in the market, if the value is under what we think, we should be able to buy back our shares flexibly. That's our main objective. Up until now, using the program has not occurred yet. If the market price fluctuation is too big, coming under our level, then we are assuming Share Buyback flexibly.

Thank you very much. Going back to businesses. In fiscal year 2026, what is going to be the biggest, strongest growth driver?

For 2026, this year, aesthetic dermatology in Japan, the market, is growing very rapidly. Us, in this, aesthetic dermatology, the growth rate for us is also high. The biggest, pillar to support, profitability is related to the growth of, aesthetic dermatology.

Thank you very much. It's almost time, so we'd like to close today's call. Thank you very much for joining the SBC Medical Group Holdings FY 2025 full year financial results announcement meeting. Thank you very much for joining and thank you very much for your future support as well. With this, we'd like to close today's meeting. Thank you very much.