Continuous Strong Revenue Growth / Turned
into Operating Profitability
MEDIROM Healthcare Technologies Inc. (Nasdaq CM: MRM), a
holistic healthcare company based in Japan (the “Company”), today
announced its preliminary, unaudited financial results for the year
ended December 31, 2022, prepared under Japanese GAAP (“JGAAP”).
These preliminary financial results and management’s estimates
included in this press release are unreviewed, unaudited, and
preliminary, are prepared solely in accordance with JGAAP, have not
been reviewed or audited under U.S. GAAP, and are based solely on
information available to the management of the Company and
management’s assumptions and expectations as of the date of this
press release, which remain subject to change. Actual results for
the year ended December 31, 2022 remain subject to the completion
of management’s reviews and reconciliations and/or adjustments
under U.S. GAAP, the Company’s other financial closing procedures,
and the audit by the independent auditor in accordance with U.S.
GAAP, and may differ from these estimated preliminary results due
to the completion of the Company’s financial closing procedures,
the audit under U.S. GAAP, and other developments that may arise
during the audit process. Accordingly, you should not place undue
reliance on this preliminary information. See “Important Notice
Regarding these Preliminary Financial Results and Management’s
Estimates” below.
The Company is currently working with its independent registered
public accounting firm to complete the audit of its financial
results for the year ended December 31, 2022 in accordance with
U.S. GAAP and to prepare its Annual Report on Form 20-F containing
the audited financial statements for full year 2022. The Company
intends to file such Annual Report by the filing deadline
prescribed by the SEC.
Preliminary Financial Results Overview for the Year Ended
December 31, 2022 under JGAAP:
- The unaudited, preliminary total revenue for the year ended
December 31, 2022 is expected to be approximately JPY6.5 billion
($49.3 million (1)), representing a projected increase of JPY1.1
billion ($8.3 million (1)) from the total revenue reported in
accordance with U.S. GAAP for the year ended December 31, 2021.
Such increase was primarily due to the full-year revenue
contribution of two subsidiaries, SAWAN and ZACC, which were
acquired by us during 2021, an increase in the revenue from sales
of our directly-owned salons to investors, which sales were
commenced in the fourth quarter of 2021, and an increase in sales
at our directly-operated salons as a result of the recovery from
COVID-19 in 2022.
- The unaudited, preliminary operating expenses are expected to
be approximately JPY6.26 billion ($47.5 million (1)) for the year
ended December 31, 2022, representing a projected increase of
JPY380 million ($2.9 million (1)) from the operating expenses
reported in accordance with U.S. GAAP for the year ended December
31, 2021. Such increase was primarily due to an increase in
outsourcing fees paid to contract-based therapists, and increased
payroll expense for therapists, hair dressers, and corporate staff
in 2022.
- The unaudited, preliminary operating income is expected to be
approximately JPY240 million ($1.8 million (1)) for the year ended
December 31, 2022, representing a projected increase of JPY711
million ($5.4 million (1)) from the operating loss reported in
accordance with U.S. GAAP for the year ended December 31, 2021.
Such increase was primarily due to the increase in total revenue
outpacing the increase in operating expenses in 2022.
(1) Convenience translations included in this press release of
Japanese yen into U.S. dollars have been made at the exchange rate
of JPY131.810 = US$1.00, which was the foreign exchange rate on
December 30, 2022 as reported by the Board of Governors of the
Federal Reserve System in weekly release on January 3, 2023.
(Millions of yen)
(Japanese GAAP, UNAUDITED,
Preliminary numbers)*
Consolidated Statements of Income:
Year Ended December 31,
2022
Revenue
6,500
Operating expenses
6,260
Operating income
240
*Actual results for the year ended December 31, 2022 remain
subject to the completion of management’s reviews and
reconciliations and/or adjustments under U.S. GAAP, the Company’s
other financial closing procedures, and the audit by the
independent auditor in accordance with U.S. GAAP, and may differ
from these estimated preliminary results due to the completion of
the Company’s financial closing procedures, the audit under U.S.
GAAP, and other developments that may arise during the audit
process. Accordingly, you should not place undue reliance on these
preliminary results. See “Important Notice Regarding these
Preliminary Financial Results and Management’s Estimates”
below.
Key Performance Indicators, or KPIs, for the Year Ended
December 31, 2022:
The Company reported major Key Performance Indicators, or KPIs,
for the year ended December 31, 2022. Data is provided for all
salons for which comparative financial and customer data is
available and excludes certain salons where such information is not
available.
- The total number of salons was 312 in December 2022, which
remained the same as that of December 2021.
- Total customers served was 826,231 for the year ended December
31, 2022, an increase from 781,438 for the year ended December 31,
2021.
- Average sales per customer was JPY 6,627 for the year ended
December 31, 2022, an increase from JPY 6,445 in the year ended
December 31, 2021.
- Average repeat ratio, a measure of repeat customers, was 81.5%
for the year ended December 31, 2022, which remained stable as
compared to 81.9% for the year ended December 31, 2021.
- Average operation ratio was 49.2% for the year ended December
31, 2022, an increase from 47.6% for the year ended December 31,
2021.
- The total number of salons with data increased to 231 in
December 2022 from 221 in December 2021.
Management Discussion
Kouji Eguchi, CEO of the MEDIROM Healthcare Technologies, said,
“We are pleased with the revenue growth and improved operating
income achieved under local GAAP during the year ended December 31,
2022, based on the unaudited, preliminary financial results
prepared under JGAAP. Our directly-operated salons and our
franchised salons contributed in very complementary ways to the
strong operational results of the year, as well as the growth of
the sales of directly-owned salons to investors, which has become
our new revenue model. In addition, the revenue contribution from
our acquired salons, which reflected the implementation of our
M&A strategy, coupled with the encouraging recovery from
COVID-19, led to a steady operating performance this year. Although
COVID-19 continued to have an impact on the general economy in
2022, the entire MEDIROM team coalesced around our goals and were
able to mitigate the impact and finish the year on a strong note.
We intend to work diligently with our independent auditor to
complete the audit of our 2022 financial results under U.S. GAAP.
We hope to continue our growth momentum in 2023.”
Important Notice Regarding these Preliminary Financial
Results and Management’s Estimates
The preliminary financial results and management’s estimates
included in this press release are unreviewed, unaudited, and
preliminary, are prepared solely in accordance with JGAAP, have not
been reviewed or audited under U.S. GAAP, and do not present all
information necessary for an understanding of the Company’s results
of operations for the year ended December 31, 2022. These
preliminary financial results for the year ended December 31, 2022
and management’s estimates presented in this press release are
based solely on information available to the management of the
Company and management’s assumptions and expectations as of the
date of this press release, which remain subject to change. Actual
results for the year ended December 31, 2022 remain subject to the
completion of management’s reviews and reconciliations and/or
adjustments under U.S. GAAP, the Company’s other financial closing
procedures, and the audit by the independent auditor in accordance
with U.S. GAAP, and may differ from these estimated preliminary
results due to the completion of the Company’s financial closing
procedures, the audit under U.S. GAAP, and other developments that
may arise during the audit process.
The Company expects the actual results may differ from these
preliminary results contained in this press release in revenue
recognition of franchise membership fees (as-billed basis in this
preliminary result while as-earned basis during the estimated
franchising periods after conversion) when converted from JGAAP
into U.S. GAAP, the impact of which, based upon management’s
current assumption and estimates, is believed to be insignificant.
Other potential changes from the these preliminary financial
results could result from the conversion into U.S. GAAP , among
others, of the following line items: (1) recognition of impairment
losses on our long-lived salon assets; (2) recognition of
impairment losses on our goodwill and other intangible assets; (3)
increase/decrease in allowance or provisional expenses; (4)
increase/decrease in cost of goods sold or inventories,
particularly those related to MOTHER BraceletⓇ, which are currently
calculated based on standard costs and subject to adjustments into
actual costs primarily due to changes in foreign currency exchange
rates.
The preliminary financial results for the year ended December
31, 2022 included in this press release have been prepared by and
are the responsibility of the Company’s management. The Company’s
independent auditor has not audited, reviewed, compiled, or
performed any procedures with respect to the preliminary financial
results presented in this press release either under JGAAP or U.S.
GAAP. Accordingly, the Company’s independent auditor does not
express an opinion or any other form of assurance with respect
thereto.
The Company intends to file its Annual Report on Form 20-F
containing the audited financial statements for the year ended
December 31, 2022 prepared in accordance with U.S. GAAP by the
filing deadline prescribed by the SEC, and such financial
information for 2022 contained in the Annual Report, including the
audited the Company’s financial statements prepared in accordance
with U.S. GAAP, may differ from those disclosed in this preliminary
annual results press release. As such, these estimates should not
be viewed as a substitute for the Company’s audited annual
financial statements prepared in accordance with U.S. GAAP and are
not necessarily indicative of any future period. Accordingly, you
should not place undue reliance on this preliminary
information.
About MEDIROM Healthcare Technologies Inc.
MEDIROM operates 312 (as of December 31, 2022) relaxation salons
across Japan, Re.Ra.KuⓇ, being its leading brand, and provides
healthcare services. In 2015, MEDIROM entered the health-tech
business, and launched new healthcare programs using on-demand
training app called “LavⓇ”, which is developed by the company.
MEDIROM also entered the device business in 2020 and started mass
production and shipments of a smart tracker “MOTHER BraceletⓇ”.
MEDIROM plans to expand the scope of its business to include data
analysis utilizing the data it has collected since formation of the
company.
Forward-Looking Statements
Certain statements in this press release are forward-looking
statements for purposes of the safe harbor provisions under the
U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements may include estimates or expectations
about the Company’s possible or assumed operational results,
financial condition, business strategies and plans, market
opportunities, competitive position, industry environment, and
potential growth opportunities. In some cases, forward-looking
statements can be identified by terms such as “may,” “will,”
“should,” “design,” “target,” “aim,” “hope,” “expect,” “could,”
“intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,”
“predict,” “project,” “potential,” “goal,” or other words that
convey the uncertainty of future events or outcomes. These
statements, particularly the statements with respect to the
Company’s audit process, the anticipated completion of the audit,
and the timing of the filing of the Company’s Annual Report on Form
20-F, relate to future events or to the Company’s future financial
performance, and involve known and unknown risks, uncertainties and
other factors that may cause the Company’s actual results, levels
of activity, performance, or achievements to be different from any
future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements. You
should not place undue reliance on forward-looking statements since
they involve known and unknown risks, uncertainties and other
factors which are, in some cases, beyond the Company’s control and
which could, and likely will, affect actual results, levels of
activity, performance or achievements. Any forward-looking
statement reflects the Company’s current views with respect to
future events and is subject to these and other risks,
uncertainties and assumptions relating to the Company’s operations,
results of operations, growth strategy and liquidity. The Company
assumes no obligation to publicly update or revise these
forward-looking statements for any reason, or to update the reasons
actual results could differ from those anticipated in these
forward-looking statements, even if new information becomes
available in the future.
URL: https://medirom.co.jp/en
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version on businesswire.com: https://www.businesswire.com/news/home/20230120005105/en/
Investor Relations Team Junpei Akashi ir@medirom.co.jp
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