SBC Medical Group 2025 Q2 Earnings Sharp EPS Drop Despite Record Net Income

SBC Medical Group reported its fiscal 2025 Q2 earnings on August 13, 2025. The results revealed a significant decline in revenue and earnings, though the company noted a record high in Q2 net income over the past two years. The report also highlighted ongoing strategic shifts and long-term initiatives.

SBC Medical Group's Q2 2025 results fell well below expectations, marked by a sharp drop in both revenue and earnings. The company did not issue updated guidance or provide forward-looking financial estimates, focusing instead on strategic positioning for long-term competitiveness.

Revenue

SBC Medical Group's revenue fell by 18.3% year-over-year to $43.36 million in Q2 2025, driven by declines across multiple business lines. Franchising revenue totaled $10.01 million, while procurement revenue amounted to $15.76 million. Management services revenue dropped to $5.14 million, and rental services revenue came in at $6.85 million. Other segments contributed $5.60 million, bringing the total to $43.36 million.

Earnings/Net Income

The company’s earnings per share (EPS) fell 90.0% to $0.02 in Q2 2025, from $0.20 in the same period in 2024. Net income also declined sharply, dropping to $2.44 million, a reduction of 86.9% from $18.56 million a year ago. Despite these declines, SBC Medical Group noted that this marked the highest Q2 net income in the past two years.

Price Action

The stock of SBC Medical Group rose 5.24% during the latest trading day but edged down 1.26% for the most recent full trading week. Over the past month, the stock has fallen by 13.70%, reflecting mixed short-term investor sentiment.

Post Earnings Price Action Review

The historical strategy of purchasing SBC shares following a revenue growth quarter has proven ineffective. Over the past three years, such a strategy returned -41.16%, significantly underperforming the 9.84% benchmark return. With an excess return of -50.99% and a CAGR of -48.06%, the approach has led to substantial losses. Notably, the strategy recorded a maximum drawdown of 0.00%, suggesting a failure to benefit from market upswings while avoiding further losses.

CEO Commentary

Yoshiyuki Aikawa, Chairman and Chief Executive Officer, emphasized that Q2 2025 reflected strategic shifts to position SBC Medical Group for long-term competitiveness. The CEO noted the discontinuation of staffing services, targeted divestitures, and a revised fee structure. He highlighted the company’s extensive network of 259 franchise locations and 6.31 million customer visits over the past twelve months. Aikawa acknowledged challenges in Japan’s consumer discretionary market, particularly trade restrictions and cautious consumer spending, while expressing optimism about key initiatives, such as the acquisition of MB Career Lounge and the inclusion of JUN CLINIC.

Guidance

The company did not provide specific financial guidance for future periods, focusing instead on long-term strategic objectives such as optimizing the franchise model, capturing growth opportunities, and transitioning to higher-margin operations.

Additional News

The Punch newspaper, Nigeria’s most widely read daily, reported on several developments in the week following SBC’s earnings release. Among the top stories was the Nigerian government’s approval of nine new private universities, reflecting continued expansion in the education sector. Political developments were also prominent, including a by-election controversy over missing candidate names on the INEC list and the suspension of fund requests by the Accountant-General ahead of the 2025 budget.

In the business sector, Dangote Refinery restored fuel marketers amid a distribution controversy, and the Nigerian aviation sector faced internal disputes, including a split among pilots over ambassadorship roles. Additionally, the federal government urged states to support a new coast guard bill to enhance maritime security.