MEDIROM Healthcare Technologies (MRM) AI Stock Analysis

• Market Cap: $1.82M
• Dividend Yield: N/A
• Average Volume (3M): 643.88K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.79
• Revenue Growth: -7.60%
• EPS Growth: -118.80%
• Country: US
• Employees: 430
• Sector: Consumer Cyclical
• Sector Strength: 52
• Industry: Personal Products & Services
• EPS (TTM): -0.12
• Shares Outstanding: 7,901,950
• 10 Day Avg. Volume: 100,776
• 30 Day Avg. Volume: 643,879
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.05
• Price to Cash Flow (P/CF): N/A
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $5.00
• Price Target Upside: 1251.35% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

MEDIROM Healthcare Technologies is currently struggling with significant financial and operational challenges. High leverage, declining revenues, and negative cash flow emphasize the need for strategic improvements. The technical indicators point to a bearish market sentiment, while valuation metrics suggest unattractiveness due to ongoing losses. The lack of clarity from recent earnings calls further adds to the uncertainty. Overall, the stock's outlook is constrained by these multiple adverse factors.

MEDIROM Healthcare Technologies Business Overview & Revenue Model

Company Description

MEDIROM Healthcare Technologies Inc. provides holistic healthcare services in Japan. It operates in two segments, Relaxation Salon and Digital Preventative Healthcare. The Relaxation Salon segment owns and franchises relaxation salons, which provide finger-pressure style bodywork therapy, stretch therapy, and posture and joint alignment, as well as physical therapy elements; and various individual services, including anti-fatigue therapy, athletic support therapy, slim-down therapy, and reflexology. As of December 31, 2021, this segment operated 312 relaxation salons under the Re.Ra.Ku and Ruam Ruam brand. The Digital Preventative Healthcare segment offers government-sponsored Specific Health Guidance program, utilizing Lav, its internally developed on-demand health monitoring smartphone application; MOTHER Tracker for fitness applications; and preventative healthcare services utilizing its digital application and devices. MEDIROM Healthcare Technologies Inc. also operates Re.Ra.Ku College that offers continuing training for franchise owners, home office staff, and salon staff covering topics, such as customer service, salon operations, and relaxation techniques located in the Odaiba area in Tokyo. The company was formerly known as MEDIROM Inc. and changed its name to MEDIROM Healthcare Technologies Inc. in March 2020. MEDIROM Healthcare Technologies Inc. was incorporated in 2000 and is headquartered in Tokyo, Japan.

How the Company Makes Money

MEDIROM Healthcare Technologies makes money through a combination of service fees from its relaxation and wellness studios, product sales, and digital health solutions. The company's primary revenue stream comes from its network of Re.Ra.Ku studios, where customers pay for various wellness services such as body treatments and fitness consultations. Additionally, MEDIROM generates revenue through the sale of health-related products and digital services, including wellness apps and devices that help users track and manage their health. The company may also engage in partnerships with corporate clients and other healthcare providers to expand its service offerings and reach, contributing to its revenue.

MEDIROM Healthcare Technologies Financial Statement Overview

Summary

MEDIROM Healthcare Technologies is facing significant financial challenges, with declining revenues and persistent operational losses impacting profitability. The company's high leverage and negative cash flow position underline the need for strategic financial management to stabilize its financial health. Improving operational efficiency and reducing debt are critical for enhancing future financial performance.

Income Statement

The company has experienced declining revenue with a negative revenue growth rate from 2022 to 2023. The gross profit margin stands at approximately 22.98% for 2023, indicating some ability to cover costs. However, the company is struggling with profitability, as evidenced by the negative EBIT and net profit margins due to significant operating losses. This reflects challenges in managing expenses relative to revenue, impacting overall profitability.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio, highlighting significant leverage. The equity ratio is low, suggesting limited shareholder equity relative to total assets. Furthermore, the return on equity is positive for 2023 due to a positive net income, but the high levels of debt increase financial risk. The company's ability to enhance its financial stability is contingent on reducing debt levels and improving equity.

Cash Flow

The cash flow statement indicates challenges in cash management, as reflected by negative free cash flow. The operating cash flow to net income ratio is negative, signaling inefficiencies in converting net income into cash. A reduction in capital expenditures could improve free cash flow. The company's negative free cash flow growth rate from 2022 to 2023 is concerning.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
7.06B	6.83B	6.95B	5.41B	3.34B	3.91B
	Gross Profit
1.47B	1.57B	1.90B	1.42B	428.95M	950.76M
	EBIT
-717.99M	-391.58M	96.97M	-395.38M	-639.59M	78.90M
	EBITDA
-370.14M	310.08M	281.02M	-269.13M	-577.30M	125.07M
	Net Income Common Stockholders
-111.71M	115.05M	148.97M	-990.73M	-539.17M	17.34M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
605.95M	106.85M	605.95M	377.12M	1.47B	552.14M
	Total Assets
6.75B	6.85B	6.75B	5.75B	5.71B	4.76B
	Total Debt
2.46B	3.65B	2.46B	2.04B	1.90B	1.66B
	Net Debt
1.86B	3.54B	1.86B	1.67B	463.82M	1.15B
	Total Liabilities
6.81B	6.63B	6.81B	5.96B	5.22B	4.16B
	Stockholders Equity
-59.38M	210.88M	-59.38M	-208.34M	491.26M	600.06M
Cash Flow		Free Cash Flow
-905.71M	-767.58M	-806.44M	-652.88M	-439.98M	464.00K
	Operating Cash Flow
-807.42M	-631.74M	-685.70M	-557.23M	-366.42M	7.87M
	Investing Cash Flow
259.00M	-328.58M	580.44M	-83.94M	-139.60M	-37.93M
	Financing Cash Flow
575.34M	461.21M	340.10M	-427.95M	1.43B	331.99M

MEDIROM Healthcare Technologies Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.37
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRM, the sentiment is Negative. The current price of 0.37 is below the 20-day moving average (MA) of 0.53, below the 50-day MA of 0.73, and below the 200-day MA of 2.49, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 23.72 is Positive, neither overbought nor oversold. The STOCH value of 11.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MRM.

MEDIROM Healthcare Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EHC	72 Outperform	$10.20B	22.71	24.52%	0.63%	11.91%	28.47%
CHE	70 Outperform	$9.01B	30.94	27.12%	0.31%	7.37%	11.17%
AMED	65 Neutral	$3.04B	71.30	3.93%	―	5.01%	―
ADUS	64 Neutral	$1.80B	23.36	8.78%	―	9.06%	10.68%
HCSG	64 Neutral	$740.76M	18.88	8.25%	―	2.65%	3.34%
Sector *	59 Neutral	$12.17B	11.04	-1.10%	3.77%	1.26%	-19.70%
MRM	38 Underperform	$1.82M	―	54.56%	―	-7.60%	-118.80%