SBC Medical (NASDAQ: SBC) Announces New Translation App After Zacks & Sidoti Initiate Coverage, Emphasize Strong Growth
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February 07, 2025 08:35 AM Eastern Standard Time
By Gerelyn Terzo, Benzinga
With a potential Goldilocks setup in the economy being encouraged in part by a resilient consumer, the broader stock market was hovering near record territory toward the end of last year. Not to be outdone, healthcare-related companies have also been rallying, as evidenced by a gain of almost 20% in the S&P 500 Health Care Sector Index over the past 12 months.
One of the stocks that has captured the attention of Wall Street of late is Tokyo-based SBC Medical Group (NASDAQ: SBC), a fast-growing service provider in the burgeoning medical aesthetics market that trades on Nasdaq. Most recently, Zacks Small-Cap Research (SCR) and Sidoti & Company have initiated coverage on the stock.
In the October report, Zacks emphasized SBC Medical Group’s expansion efforts comprising both mergers and acquisitions, and organic growth, owing to a growing franchisee network and revenue base buttressed by a strong balance sheet. SBC Medical has been an early mover in Japan’s aesthetic medicine market, which according to the analyst firm, serves as a tailwind for future growth.
Zacks SCR believes SBC Medical has “significant value.” Investors who are looking to back a leader in the medical innovation space can learn more about the opportunity in SBC Medical stock here.
SBC Medical’s Growing Revenue
Chief among the catalysts for the outlook in the report is SBC Medical’s strong reported revenue growth. The company’s revenue has been growing year-over-year, increasing from $174 million in 2022 to $194 million in 2023. Total revenues for the nine months ending Sep. 30, 2024 were $160 million, representing an increase of 23% from $131 million in the same period of 2023, SBC said.
As a franchisor, SBC Medical has been growing its footprint amid a rising number of clinics in its vast network that contribute royalty revenue. In addition to Japan, the company also operates clinics in Los Angeles and Ho Chi Minh City, Vietnam, and has set its sights on a global expansion.
SBC Medical is also operating in the black, reporting that with net income for the nine months ending Sep. 30, 2024 of $40.1 million, compared to $24.3 million in the same period of 2023. The company’s performance is being fueled by rising royalty income and other revenue streams with high gross margins, it says.
Capitalizing On Medical Tourism For New Revenue Opportunities In 2025
The company has announced numerous initiatives to enhance its revenue streams in order to continue to grow its business both domestically and internationally. In January, SBC announced the launch of its proprietary translation app tailored for medical aesthetics staff and the full-scale implementation of its Inbound-Focused Clinics initiative. SBC says this move is designed to address the growing demand for medical tourism and to ensure that international patients can seamlessly experience Japan's advanced medical aesthetic treatments.
Within Asia, rising awareness of aesthetic care and the increasing appeal of medical tourism are positioning countries like Japan, South Korea, and Thailand as top destinations for international patients, SBC notes. In Japan, the influx of foreign patients seeking high-quality medical aesthetics continues to rise. SBC alone says it welcomes over 10,000 inbound patients annually, with inquiries surpassing 20,000 each year. China remains a key market driver, though demand from English-speaking regions is also on the rise, the company says. Recognizing this trend, SBC says it is scaling up its operational capacity and implementing innovative solutions to support sustainable growth in this dynamic sector.
Striving To Shift Communication With A Specialized Translation App
To address language barriers, SBC has developed a translation app tailored specifically for medical aesthetics. It says the app ensures the accurate translation of specialized terminology, facilitating seamless communication between clinic staff and international patients. Currently supporting English and Chinese, the app plays a pivotal role in enabling smooth consultations and pre-treatment explanations. By creating a welcoming environment where language is no obstacle, SBC says it is empowering patients to feel secure and confident in their treatment choices. Future plans include expanding the app's language capabilities and rolling it out across all clinics nationwide, ensuring comprehensive accessibility for a global clientele, SBC noted.
SBC Medical’s Valuation: Opportunities And Risks
Zacks SCR pointed out that the medical aesthetic market is one that lacks direct competitors despite some companies offering similar services to SBC Medical. As a result, it is difficult to make apples-to-apples comparisons on the stock valuation as analysts typically do.
In response, the Zacks analyst has taken a subset of the medical aesthetics space specializing in the healthcare sector to determine a fair valuation. The estimate is contingent upon the company executing on its growth plans as well as a broadening of its initiatives.
Zacks SCR is encouraged by SBC Medical’s engagement with the industry, as evidenced by its participation in the Aesthetic Surgery and Laser Society (ASLS) aesthetic medicine conference in Korea held earlier this year. The firm also mentioned SBC Medical’s recently inked partnership with Tokyo-based technology provider B4A, which provides high-tech business solutions.
SBC Medical’s mettle was tested amid a business combination with Pono Capital Two, a deal that was completed in Septemb
er 2024, paving the way for the stock’s debut on Nasdaq.
When it comes to investing, there are no sure things. Zacks SCR and Sidoti have also outlined potential risks that investors might consider. Among them is the uncertain nature of the wider aesthetic medical industry, which is heavily dependent on emerging technology for its growth. SBC’s international presence presents a foreign exchange risk since Its businesses are transacted in Japanese yen but translated into U.S. dollars for reporting purposes, a dynamic that has affected the company’s year-to-date financial performance in 2024.
Investors who believe that the benefits outweigh the risks in SBC Medical’s stock can dive deeper into some of the company’s latest developments and offerings here.
Featured photo by nattanan23 on Pixabay
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