TOKYO – MEDIROM Healthcare Technologies Inc. (NASDAQ: MRM), a provider of holistic healthcare services, announced its entry into the rehabilitation industry through the establishment of a new subsidiary, MEDIROM Rehab Solutions Inc. The subsidiary has acquired all rehabilitation centers formerly owned by Y’s, Inc., which includes ten cerebral infarction rehabilitation centers in Tokyo and other major cities in Japan.
Cerebral infarction rehabilitation is a specialized program aimed at aiding the recovery of stroke victims. The acquired centers offer a range of services including physical, occupational, speech and cognitive therapies, as well as emotional support for patients who have suffered strokes due to blockages of blood vessels in the brain.
Kouji Eguchi, CEO of Medirom, expressed optimism about the expansion, underlining the company’s intention to leverage its existing expertise in wellness clinics and health-tech capabilities to enhance the rehabilitation services provided by the new subsidiary.
MEDIROM Rehab Solutions Inc., led by CEO Yasuhiro Ito, was incorporated on 06.10.2024 and operates from Tokyo. The company focuses on providing rehabilitation services for cerebral infarction, which are not covered by insurance, and providing contract rehabilitation services.
MEDIROM Healthcare Technologies, founded in 2000, operates in three segments: Relaxation Salon, Digital Preventative Healthcare and Luxury Beauty. The company’s entry into the rehabilitation sector marks a significant step in the diversification of its service offering.
This expansion, based on a press release, represents a strategic move by MEDIROM to integrate its healthcare technology with field services to meet the needs of stroke rehabilitation patients in Japan.
In other recent news, MEDIROM Healthcare Technologies Inc. announced a major acquisition. The company will acquire 70% of Japan Gene Medicine Corporation, a company specializing in prenatal genetic testing and analysis. This agreement, which comes into force on 06.30.2024, also includes an option for MEDIROM to secure the remaining 30% of the shares via a Memorandum of Understanding for Additional Transfer.
This move, part of MEDIROM’s strategy to expand its portfolio of HealthTech solutions, is expected to create synergies with its existing wellness salon business. The acquisition is based on an enterprise value of six times adjusted EBITDA, with the total price of acquiring 70% of the shares amounting to 2 billion yen. The transaction will be financed through company funds and borrowings.
A special purpose vehicle will be established to facilitate the transaction, which is subject to various conditions. The closing date of the transaction will be determined once all conditions have been met. The Additional Transfer Memorandum of Understanding allows for the potential purchase of the remaining shares by 06.30.2027.
InvestingPro Insights
MEDIROM Healthcare Technologies Inc.’s recent expansion into the rehabilitation industry comes at a critical time for the company. According to data from InvestingPro, MEDIROM’s revenue growth has been negative, declining -1.81% over the trailing twelve months through Q4 2023. This move into the rehabilitation industry could be seen as a strategic effort to diversify and potentially increase revenue streams.
However, investors should be cautious. InvestingPro advice highlights that MEDIROM “operates with a significant debt burden” and “may experience difficulty making interest payments on the debt.” These factors could pose challenges as the company invests in its new subsidiary and acquired rehabilitation centers.
The stock’s performance has been concerning, with InvestingPro data showing a total return of -52.78% over the past year. This aligns with InvestingPro’s advice that the “stock has fallen sharply over the past six months.” The expansion into rehabilitation services could be seen as an attempt to reverse this trend and create new growth opportunities.
Despite these challenges, it’s worth noting that MEDIROM has been “profitable over the past twelve months,” according to InvestingPro advice. This profitability, combined with strategic expansion, could provide some optimism for the company’s future prospects.
For investors looking for a more comprehensive analysis, InvestingPro offers 14 additional recommendations for MEDIROM Healthcare Technologies Inc., providing a deeper understanding of the company’s financial health and market position.
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