MEDIROM Healthcare Technologies Announces Acquisition of Japan Gene Medicine Corporation

NEW YORK, July 10, 2024 (GLOBE NEWSWIRE) — MEDIROM Healthcare Technologies Inc. (“we”, “our”, “us” or “the Company”) hereby announces that the Company plans to acquire a majority of Japan Gene Medicine Corporation (the “Target Company”). On June 30, 2024, the Company entered into a share transfer agreement (the “Share Transfer Agreement”) to acquire 70.0% of the shares of the Target Company from an individual shareholder. The Company has also entered into a legally binding memorandum of understanding (the “Additional Transfer Memorandum of Understanding”), effective as of June 30, 2024, to obtain an option to acquire the remaining 30.0% of the Target Company’s shares from the seller. The closings of the transactions under the Share Transfer Agreement and Additional Transfer Memorandum of Understanding are each subject to certain conditions. Certain of these closing conditions under the Share Transfer Agreement are summarized below.

Japan Gene Medicine is a company engaged in the prenatal diagnosis business, providing genetic testing and analysis, and the company does business with major private, public and university hospitals in Japan. By understanding the condition of the fetus and the presence of any diseases or disorders, medical professionals can consider the most appropriate method of delivery and therapeutic education tailored to the condition of the fetus.

Although in other countries, especially in Europe and the United States, similar prenatal genetic testing services have become commonly available and utilized, in Japan, such services have not been common, with only 7.2% of pregnant women using such services in 2016.⁽*¹⁾

Furthermore, in Japan and the Asian region at large, certain demographic trends point to Japan Gene Medicine’s significant growth potential. In the region, the childbearing age is increasing and the birthrate is declining rapidly therefore the potential need and benefits of genetic testing and analysis is increasing.

Kouji Eguchi, Chief Executive Officer, stated, “We believe that Japan Gene Medicine is one of the most competitive companies in the genetic testing and analysis services space and we expect future demand in Japan to grow rapidly. In the past, there has been insufficient marketing and education regarding such services and their value, which we believe presents a significant market opportunity.”

“We also believe there are significant synergies with our wellness salon business, Re.Ra.Ku®︎. Japan Gene Medicine’s target age group for women is in their 20s to 40s, which matches Re.Ra.Ku’s and will allow us to expand our service offering and improve our value proposition and customer experience.”

“The acquisition of Japan Gene Medicine is in line with our strategic objective to become a holistic healthcare company that provides comprehensive solutions and services for prevention and treatment. We obtain assets that further expand our presence in Japan and our commitment to grow in the Healthcare Technology industry. Japan Gene Medicine adds to our HealthTech solutions portfolio consisting of our on-demand training application “Lav®︎” that provides specific health guidance; our development and manufacturing of the world’s first smart tracker bracelet that does not require charging, “MOTHER Bracelet®”; and our deployment of our device-based monitoring system, “REMONY”.”

Share Acquisition from the Target Company and the Seller

In addition to the prenatal genetic testing and analysis services provided by Japan Gene Medicine, two other companies that are substantially owned by the seller offer these services. Japan Gene Medicine, which owns the testing equipment, provides subcontracted testing and analysis services to these two companies. As a condition to the closing of the share transfer, the Japan Gene Medicine and such other two companies will conclude amended subcontracting agreements in forms reasonably satisfactory to us. Based on our negotiations with the seller, it is expected that such new subcontracts will revise the price of the subcontracted testing services so that substantially all the economic benefits of these services accrue to Japan Gene Medicine.

We have agreed with the seller on transfer consideration based on an enterprise value of six times Adjusted EBITDA^(*2), which was calculated on an adjusted basis assuming that the aforementioned economic benefits had accrued to the Target Company for the one-year period ended December 31, 2023.

*1: Source: Aiko Sasaki, Haruhiko Sago et al: Trends in prenatal genetic testing in Japan 1998-2016, Journal of Japan Society of Perinatal and Neonatal Medicine 2018; 54:101-107.

*2: Adjusted EBITDA is defined as operating income plus depreciation, amortization of intangibles, and expenses incurred at the seller’s direction other than for the purpose of operating the Target Company’s business, with all such figures determined based on Japanese generally accepted accounting principles (“GAAP”).

Outline of the Transaction Stipulated in the Share Transfer Agreement.

Outline of the transaction as set forth in the Additional Transfer Memorandum of Understanding

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 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 because 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. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements in this press release include:

• the Company’s ability to obtain the necessary financing to complete the contemplated acquisition transaction on acceptable terms;
• the Company’s satisfactory completion of due diligence;
• the satisfaction of the conditions to close the acquisition, and the Company’s ability to consummate the transactions contemplated by the Additional Transfer Memorandum of Understanding;
• the Company’s ability to realize the anticipated benefits of the transaction;
• the Company’s ability to successfully integrate the acquired business;
• the Company’s ability to obtain necessary regulatory approvals;
• potentially significant transaction costs and unknown liabilities;
• the Company’s ability to achieve its development goals for its business and execute and evolve its growth strategies, priorities and initiatives;
• changes in Japanese and global economic conditions and financial markets, including their effects on the Company’s expansion in Japan and certain overseas markets;
• the Company’s ability to achieve and sustain profitability in its Digital Preventative Healthcare Segment;
• the Company’s ability to maintain and enhance the value of its brands and to enforce and maintain its trademarks and protect its other intellectual property;
• the Company’s ability to raise additional capital on acceptable terms or at all;
• the Company’s level of indebtedness and potential restrictions on the Company under the Company’s debt instruments;
• changes in consumer preferences and the Company’s competitive environment;
• the Company’s ability to respond to natural disasters, such as earthquakes and tsunamis, and to global pandemics, such as COVID-19; and
• the regulatory environment in which the Company operates.

More information on these risks and other potential factors that could affect the Company’s business, reputation, results of operations, financial condition, and stock price is included in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” and “Operating and Financial Review and Prospects” sections of the Company’s most recently filed periodic report on Form 20-F and subsequent filings, which are available on the SEC website at www.sec.gov. The Company assumes no obligation to 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.

About MEDIROM Healthcare Technologies Inc.

MEDIROM, a holistic healthcare company, operates 307 (as of May 31, 2024) 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 an on-demand training app called “Lav^®”, which is developed by the Company. MEDIROM also entered the device business in 2020 and has developed a smart tracker “MOTHER Bracelet^®”. In 2023, MEDIROM launched REMONY, a remote monitoring system for corporate clients, and has received orders from a broad range of industries, including nursing care, transportation, construction, and manufacturing, among others. MEDIROM hopes that its diverse health-related product and service offerings will help it collect and manage healthcare data from users and customers and enable it to become a leader in big data in the healthcare industry. For more information, visit https://medirom.co.jp/en.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/260316ca-9935-41dd-bebd-7089819b2f01

Contact
Investor Relations Team
ir@medirom.co.jp