NEW YORK - MEDIROM Healthcare Technologies Inc., a holistic healthcare company, has entered into a share transfer agreement to acquire 70% of Japan Gene Medicine Corporation, a Japanese prenatal diagnosis firm. The transaction, effective June 30, 2024, also includes an option for MEDIROM to purchase the remaining 30% shares through an Additional Transfer Memorandum of Understanding.
Japan Gene Medicine specializes in genetic testing and analysis for prenatal diagnosis, collaborating with major hospitals in Japan. Despite the low utilization rate of such services in Japan, with only 7.2% of pregnant women using these services in 2016, demographic trends suggest a growing market potential in the region.
The acquisition is part of MEDIROM's strategy to expand its HealthTech solutions portfolio, which includes a smart tracker bracelet and a remote monitoring system. The company believes that the acquisition will create synergies with its existing wellness salon business, targeting a similar demographic of women aged 20 to 40.
The share transfer agreement includes revised subcontracting agreements and is based on an enterprise value of six times Adjusted EBITDA, calculated under Japanese GAAP. The total price for the 70% share acquisition is 2 billion yen, with the transaction expected to be financed through the company's funds and borrowings.
A special purpose company will be established to facilitate the transaction, which is subject to certain conditions including satisfactory contractual terms for subcontracted services and financial institution commitments.
The transaction's closing date will be determined once all conditions are met. The Additional Transfer Memorandum of Understanding allows for the potential purchase of the remaining shares by June 30, 2027, with the price determined by a multiplier applied to the adjusted EBITDA.
This news is based on a press release statement from MEDIROM Healthcare Technologies Inc. and provides an overview of the planned acquisition's details and the strategic intent behind the move.
InvestingPro Insights
As MEDIROM Healthcare Technologies Inc. steps into the future with its strategic acquisition of Japan Gene Medicine Corporation, it’s important for investors to consider the financial health and market performance of the company. Here are some key insights based on data and tips from InvestingPro:
InvestingPro Data:
- Market Cap (Adjusted): $20.51 million USD signals a relatively small player in the healthcare market.
- Price / Book (as of Q4 2023): At 14.57, this ratio suggests that the market values the company significantly higher than its net asset value, which could indicate investor confidence or a premium for potential growth.
- Revenue Growth (as of Q4 2023): With a slight decline of -1.81%, it appears that MEDIROM may be facing challenges in growing its top line.
InvestingPro Tips:
- MEDIROM operates with a significant debt burden and may have trouble making interest payments on its debt, which is a crucial factor for investors to consider given the company's financial strategy for the acquisition.
- The stock has fared poorly over the last month, with a 1 Month Price Total Return of -21.3%, reflecting investor sentiment and market conditions that could impact the short-term performance of the investment.
For those looking to delve deeper into MEDIROM's financials and market performance, InvestingPro offers additional insights and tips. Currently, there are 12 more InvestingPro Tips available, which can be accessed at https://www.investing.com/pro/MRM. Investors can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing a valuable resource for making informed investment decisions.
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