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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Medirom Healthcare Technologies Inc. Reports Financial and Operating Results for the First Half of 2021

November 8, 2021 GMT

NEW YORK, Nov. 08, 2021 (GLOBE NEWSWIRE) -- MEDIROM Healthcare Technologies Inc. (NasdaqCM: MRM, “MEDIROM”), a leading holistic health services provider in Japan, today announced MEDIROM’s interim financial results for the six month ended June 30, 2021.

FY 2021 Interim Financial Highlights

  • Total revenue for the first half of the year increased by 57.0% to JPY2,127 million (US$19.1 million) from JPY1,356 million in a year ago period, due to the recovery from the COVID-19 negative impact in 2020.

  • Cost of revenues increased by 39.4% to JPY1,768 million (US$15.9 million) from JPY1,269 million in a year ago period, as a result of the reopening of the salons and salon acquisitions.

  • SG&A increased by 61.3% to JPY840 million (US$7.5 million) from JPY521 million in a year ago period, as a result of the stock compensation expenses and increased professional fees.

  • Net loss of JPY521 million (US$4.6 million) was recorded due to the increased cost of revenues and SG&A. JPY148 million of the stock compensation expense was one of the major factors of the loss.

  • Adjusted EBITDA and Adjusted EBITDA margin were negative JPY291 million (US$2.6 million) and minus 13.7%, respectively.

  • Cashflow from Operating Activities was negative JPY348 million (US$3.1 million), mainly due to the decrease in net income.

  • Cashflow from Investing Activities was negative JPY410 million (US$3.6 million), primarily due to salon acquisitions.

  • Cashflow from Financing Activities was negative JPY 326 million (US$2.9 million), due to the deferred offering costs and bank loan repayment.

  • Net cash decreased by JPY 1,084 million (US$9.7 million).


Corporate Highlights 1H2021

  • Number of Salons increased by 24 stores to 313 as of June 30, 2021 from 289 stores as of June 30, 2020, primarily attributed to the acquisition of SAWAN in May 2021.

  • Sales per Customer increased by 1.9%, from JPY6,234 in June 2020 to JPY6,350 in June 2021.

  • Operation Ratio improved by 7.8 percentage points to 48.6% in June 2021 from 40.8% in the same month of 2020.

  • Total Customers Served also recovered by 41.9% to 373,723 in the first half of 2021 from 263,351 in the same period in 2020.

  • Our mobile application Lav® is being upgraded for general consumers use on top of the engagement by Specific Guidance Program.

  • In December 2021, we are planning to launch a self-charging smart bracelet, MOTHER Tracker® in Japan.

Outlook and perspective FY 2021 and FY2022


  • The Declaration of Emergency for COVID-19 was lifted in October 2021. There is no closed salon.

  • After observing the KPIs transition in FY2020 and ongoing FY2021, we concluded that our industry is regarded as a necessary service for people’s daily life. We believe that relaxation salon business segment will continue to stay stable, and that we can generate reasonable profit by controlling the cost and expenses.

  • We will actively look for the opportunities to grow our salon business through M&A transactions.

  • Due to the nature of the Company’s business and its strategy, such as the sale of directly-operated salons to franchisees in the second half of the year and the rise in sales in summer, sales and profits tend to be skewed toward the second half of the year. This trend has been observed for the past 10 years.

Recent Developments

On October 31, 2021, Ms. Miki Aoki, resigned as a member of our board of directors to assume a role as director of our subsidiary, Bell Epoc Wellness Inc. Ms. Aoki indicated that her resignation is not due to any disagreement with the Company on any matter relating to its operations, policies or practices. The Company has no immediate plans to replace Ms. Aoki for the time being, however, it will consider nominating a new director(s) for the next annual shareholders meeting. Bell Epoc Wellness Inc. changed its name to Wing Inc. effective November 1, 2020

Comments from the CEO

Kouji Eguchi, Chief Executive Officer of MEDIROM, stated, “I want to emphasize our view of Medirom’s importance to the communities where we have a presence and of our ongoing focus on keeping our employees safe while supporting customers during the pandemic. Throughout 2020, we expanded our business model while operating in the challenges posed by the COVID-19 pandemic by providing a level of customer service that our customers have come to know and love.”

“The increase in revenues reflects the foundation we have built and continue to expand upon even during challenging times. At the end of June of this year we had 313 salons, an increase of 24, as compared to 289 at the end of June of last year,” continued Mr. Eguchi. “We are looking forward to the future as we carefully and strategically plan to expand our operations and meet the demand of our partners and customers.”


The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially 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 our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.

Non-GAAP Financial Measures

This press release includes non-GAAP financial metrics that we use to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. Adjusted EBITDA and Adjusted EBITDA Margin are financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Definitions for such non-GAAP measures can be found in the Appendix to this presentation. Any non-GAAP financial measures used in this presentation are in addition to, and not meant to be considered superior to, or a substitute for, the Company’s financial statements prepared in accordance with GAAP. A reconciliation of each of these non-GAAP measures to their nearest GAAP measure is set forth in the Appendix to this presentation.

The Company believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and our board of directors. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends in and in com paring our financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. Undue reliance should not be placed on these measures as the Company’s only measures of operating performance, nor should such measures be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Non-GAAP financial measures as used in respect of the Company may not be comparable to similarly titled amounts used by other companies.

(1) For a reconciliation of Adjusted EBITDA to net income (loss), the most comparable U.S. GAAP measure, see the following table.

Reconciliation of non-GAAP measures:    Year ended December 31, 
(in thousands, except Adjusted EBITDA margin) 2020($) 2020(¥) 2019(¥) 
Net (loss) income $(5,225) ¥(539,170) ¥17,335  
Dividend income and interest income  (13)  (1,334)  (1,338) 
Interest expense  128   13,234   13,591  
Gain from bargain purchases        (6,487) 
Other, net  (1,272)  (131,299)  (4,153) 
Income tax expense  (848)  (87,519)  15,961  
Equity in earnings (loss) of investment        (559) 
Operating income $(7,230) ¥(746,088) ¥34,350  
Depreciation and amortization  604   62,290   46,174  
Losses on sales of directly-operated salons to franchises        9,600  
Losses on disposal of property and equipment, net and other intangible assets, net  328   33,841   4,631  
Impairment loss on long-lived assets  1,031   106,501   44,546  
Adjusted EBITDA $(5,267) ¥(543,456) ¥139,301  
Adjusted EBITDA margin  (16.3)% (16.3)% 3.6 %

(2) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA for a period by total revenue for the same period.

About MEDIROM Healthcare Technologies Inc.

MEDIROM operates 316 (as of September 30, 2021) 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 is developing a smart tracker “MOTHER Tracker®”. MEDIROM plans to expand the scope of its business to include data analysis utilizing the data it has collected since formation of the company.



Investor Relations Team


(Yen in thousands, except share data)

  June 30, December 31,
  2021 2020
Current assets:      
Cash and cash equivalents ¥354,950  ¥1,439,733 
Accounts receivable-trade, net of allowances of ¥5,484 and ¥4,426, respectively  89,416   148,540 
Accounts receivable-other  305,851   411,278 
Inventories  10,904   7,956 
Prepaid expenses and other current assets  111,057   79,717 
Total current assets  872,178   2,087,224 
Property and equipment, net  330,692   235,930 
Goodwill  535,246   150,720 
Other intangible assets, net  91,036   97,615 
Investments  53,020   500 
Long-term accounts receivable-other, net of allowances of ¥125,939 and ¥131,759, respectively  115,247   116,942 
Right-of-use asset - operating lease, net  1,709,722   1,578,828 
Lease and guarantee deposits  784,796   710,636 
Deferred tax assets, net  613,311   655,591 
Other assets  94,768   79,480 
Total assets ¥5,200,016  ¥5,713,466 
Current liabilities:      
Accounts payable ¥62,244  ¥67,016 
Accrued expenses  814,390   889,112 
Current portion of long-term borrowings  181,884   242,281 
Accrued income taxes  13,211   43,198 
Contract liability (current)  92,988   172,063 
Advances received  438,482   461,665 
Short-term lease liability  702,685   658,320 
Other current liabilities  141,550   118,933 
Total current liabilities  2,447,434   2,652,588 
Long-term borrowings - net of current portion  573,275   668,380 
Deposit received  340,525   375,463 
Long-term contract liability - net of current portion  297,523   333,978 
Long-term lease liability - net of current portion  1,059,530   992,892 
Asset retirement obligation  256,967   191,192 
Other liabilities  18,693   7,716 
Total liabilities  4,993,947   5,222,209 
Common stock, no par value; 19,899,999 shares authorized; 4,975,000 shares issued and 4,882,500 shares outstanding at June 30, 2021; 9,999,999 shares authorized; 4,915,000 shares issued and 4,822,500 shares outstanding at December 31, 2020  1,223,134   1,179,313 
Class A common stock, no par value; 1 share authorized; 1 share issued and 1 share outstanding at June 30, 2021 and December 31, 2020  100   100 
Treasury stock, at cost- 92,500 common shares at June 30, 2021 and December 31, 2020  (3,000)  (3,000)
Additional paid-in capital  1,210,907   1,018,146 
Accumulated deficit  (2,225,072)  (1,703,302)
Total shareholders’ equity  206,069   491,257 
Total liabilities and shareholders’ equity ¥5,200,016  ¥5,713,466 


(Yen in thousands, except share and per share data)

  Six months ended June 30,
  2021  2020 
Revenue from directly-operated salons ¥1,421,413  ¥751,267 
Franchise revenue  689,148   593,236 
Other revenues  16,918   11,774 
Total revenues  2,127,479   1,356,277 
Cost of revenues and operating expenses:      
Cost of revenue from directly-operated salons  1,415,685   866,297 
Cost of franchise revenue  335,458   394,906 
Cost of other revenues  17,764   8,017 
Selling, general and administrative expenses  840,760   521,364 
Total cost of revenues and operating expenses  2,609,667   1,790,584 
Operating loss  (482,188)  (434,307)
Other income:      
Dividend income  2   2 
Interest income  506   674 
Interest expense  (6,683)  (6,076)
Gain from bargain purchases  1,014   1,624 
Government subsidies  1,065   12,230 
Other, net  19,733   1,912 
Total other income  15,637   10,366 
Loss before income tax expense  (466,551)  (423,941)
Income tax expense  55,219   19,030 
Net loss ¥(521,770) ¥(442,971)
Net loss per share      
Basic ¥(107.09) ¥(110.12)
Diluted ¥(107.09) ¥(110.12)
Weighted average shares outstanding      
Basic  4,872,224   4,022,501 
Diluted  4,872,224   4,022,501 


(Yen in thousands, except share data)

       Class A              
  Common stock common stock Treasury stock Additional Accumulated   
     Shares    Amount    Shares    Amount    Shares    Amount    paid-in capital    deficit    Total
Balance, December 31, 2020 4,915,000 ¥1,179,313 1 ¥100 92,500 ¥(3,000) ¥1,018,146 ¥(1,703,302) ¥491,257 
Issuance of common stock for exercise of over-allotment, net of issuance costs 60,000  43,821         43,821     87,642 
Net loss              (521,770)  (521,770)
Stock-based compensation            148,940     148,940 
Balance, June 30, 2021 4,975,000 ¥1,223,134 1 ¥100 92,500 ¥(3,000) ¥1,210,907 ¥(2,225,072) ¥206,069 


(Yen in thousands)

     Six months ended June 30,
  2021  2020 
Cash flows from operating activities:        
Net loss ¥(521,770) ¥(442,971)
Adjustments to reconcile net loss to net cash used in by operating activities:        
Depreciation and amortization  39,631   33,105 
Losses on sales of directly-operated salons to franchisees  49   65 
Allowance for doubtful accounts  (4,860)  (5,295)
Stock-based compensation  148,940    
Losses on disposal of property and equipment, net and other intangible assets, net  1,967   26,913 
Gain from bargain purchases  (1,014)  (1,624)
Deferred income tax expense  42,280   11,046 
Other non-cash gains – net  847   121 
Changes in operating assets and liabilities:        
Accounts receivable-trade, net  72,839   192,093 
Accounts receivable-other  108,981   89,518 
Inventories  (50)  (369)
Prepaid expenses and other current assets  (35,395)  (37,422)
Lease and guarantee deposits  (16,902)  84,323 
Accounts payable  (8,303)  (52,394)
Accrued expenses  106,131   (62,280)
Accrued income taxes  (30,267)  3,105 
Contract liability  (115,531)   
Advances received  (96,535)  (124,828)
Other current liabilities  597   (23,476)
Deposit received  (34,938)  (66,195)
Other assets and other liabilities – net  (4,963)  1,704 
Net cash used in operating activities  (348,266)  (374,861)
Cash flows from investing activities:        
Purchases of time deposits  (13,201)  (13,500)
Proceeds from maturities of time deposits     10,000 
Proceeds from sale of affiliated company securities     50,000 
Acquisition of investment securities  (52,520)   
Acquisition of property and equipment  (41,370)  (70,803)
Proceeds from sale of property and equipment     3,227 
Cost additions to internal use software  (7,631)  (9,492)
Acquisition of businesses – net of cash acquired  (300,843)  (42,393)
Proceeds from due from shareholder     7,966 
Payment received on short-term loans receivable  225   225 
Payment received on long-term accounts receivable-other, net  5,090   7,515 
Net cash used in investing activities ¥(410,250) ¥(57,255)


(Yen in thousands)

  Six months ended June 30,
     2021     2020 
Cash flows from financing activities:        
Proceeds from issuance of common stock for exercise of over-allotment, net of issuance costs ¥87,642  ¥ 
Proceeds from long-term borrowings     330,000 
Repayment of long-term borrowings  (155,502)  (114,657)
Payment of installment payables related to business acquisitions  (2,520)  (30,199)
Payment of deferred offering costs  (255,887)  (41,589)
Net cash (used in) provided by financing activities  (326,267)  143,555 
Net decrease in cash and cash equivalents  (1,084,783)  (288,561)
Cash and cash equivalents at beginning of period  1,439,733   513,621 
Cash and cash equivalents at end of period ¥354,950  ¥225,060 
Supplemental disclosure of cash flow information:        
Cash paid during the period for:        
Interest ¥6,733  ¥4,896 
Income taxes  43,199   4,953 
Non-cash investing and financing activities:        
Right-of-use assets obtained in exchange for lease liabilities  490,342   189,240 
Purchases of property and equipment included in accrued expenses  2,670   9,548 
Purchases of intangible assets included in accrued expenses  2,325    
Payables related to acquisition of businesses included in accrued expenses     60,902 
Deferred offering costs included in accrued expenses     26,476