RENAISSANCE,INCORPORATED Q4 FY2025 earnings call

• Leadership & Strategic Direction

  • New CEO Misao Mochizuki took office April 1, 2025, with a goal to become a comprehensive health solutions company for the 100-year lifespan era, pursuing transformation and accelerated growth.
  • Full acquisition of Sports OASIS completed March 31, 2024, making Renaissance the largest comprehensive sports club operator in Japan by revenue. Post-acquisition integration (PMI) costs were within planned ranges, and full synergy realization is the company's current priority.
  • The 2024-2027 mid-term management plan targets achieving record-high profits by 2027 (the lead-up to the company's 50th anniversary in 2029) through solving social health needs.

• Operational Updates

  • 5 facilities ended operation due to contract expiration, resulting in a total of 285 facilities (282 domestic + 3 in Vietnam) as of March 2025. All former OASIS directly operated stores (except 3 branded locations) have been rebranded to "Sports Club Renaissance" as of April 2025.
  • Energy conservation measures and government subsidies brought utility costs below plan, supporting operating profit growth.
  • The company raised base and entry-level employee salaries, and increased investments in existing store renovations, driving higher personnel and facility costs this period.
  • The two new Genki Jim locations launched a new operation model that does not rely on hard-to-hire specialized nursing staff, and both have had successful launches, with accelerated expansion planned to address the nationwide shortage of rehabilitation services.
  • Post-OASIS integration, the company will leverage cross-business synergies: combining Renaissance's nursing care/preventive health expertise with OASIS's product development capabilities for new home fitness goods, and expanding sales of OASIS's existing corporate health content to grow the BtoB business.

1. Sports Club Business: Revenue increased 35.3% YoY, including 32 acquired Oasis locations and 5 new Renaissance locations. Total end-of-period membership (including online) reached 500,126, a 26.6% YoY increase, a new all-time high. Renaissance standalone membership grew 3.1% YoY to 351,355, with average membership price up 2.0% YoY. Monthly corporate membership grew 15.1% YoY. All existing comparable clubs saw growth in revenue, membership, and average price, with improved churn. This segment contributed ~82% of total consolidated revenue.

2. BtoG (Regional Public Health Promotion): Revenue grew 69.6% YoY including the net increase from Oasis; Renaissance standalone revenue grew 15.5% YoY. Growth was driven by increased contracts for preventive care classes and school swimming lesson programs. 7 new public facilities won in the prior period began operation this period, and 9 more facilities starting operation from FY2026 are already secured.

3. BtoB (Corporate/Health Insurance Union Health Promotion): Revenue grew 71.8% YoY including the net increase from Oasis; Renaissance standalone revenue grew 10.4% YoY, driven by strong demand for corporate health services and online lesson programs for corporate clients.

4. Nursing Care & Medical-related Business: Revenue grew 4.9% YoY, following the opening of 2 new Genki Jim rehabilitation-focused day service locations. This segment contributed ~6% of total consolidated revenue.

5. Home Fitness Business: This is OASIS's core e-commerce/wholesale business targeting non-gym members. The popular Twist Stepper series greatly outperformed plan driving strong e-commerce growth, while the Stealy Ball wholesale line also performed well. This segment contributed ~12% of total consolidated revenue.

Total consolidated results: Revenue = 63.737 billion yen, operating profit = 1.946 billion yen, ordinary profit = 1.224 billion yen, net income attributable to parent = 0.766 billion yen, all exceeding prior year results and matching prior guidance.

• For the FY2026 March period, management forecasts 5.1% YoY revenue growth to 67.0 billion yen, driven by sports club membership and average price growth, new nursing care facility openings, and continued home fitness expansion.
• Despite ongoing upward pressure on personnel and facility costs, synergy realization from the OASIS merger and company-wide productivity improvements are expected to drive double-digit profit growth: 13.0% YoY growth in operating profit to 2.2 billion yen, 14.3% YoY growth in ordinary profit to 1.4 billion yen, and 11.0% YoY growth in net income attributable to parent to 0.85 billion yen.
• A full-year dividend of 13 yen per share is planned, in line with the company's policy of stable, sustained shareholder returns while retaining sufficient capital for growth investment.
• The company confirms it remains on track for the 2024-2027 mid-term management plan, with the 2025 March period establishing a solid growth foundation; the company will adjust resource allocations dynamically to reflect market and operational changes to deliver on plan targets.
• Planned new openings for FY2026 include 2 new sports clubs, 2 new nursing care/rehabilitation facilities, and 9 new public facility management contracts across 4 local governments, with additional openings to be evaluated throughout the year based on market conditions.

• External risks: Unstable global economic conditions may lead to continued elevated utility costs, increasing sports club operating expenses.
• Operational risks: Full synergy benefits from the OASIS acquisition have not yet been realized, and converting the additive impact of the acquisition into multiplicative growth remains a future challenge.
• Labor risks: Specialized professional positions (including nursing care staff for rehabilitation services) face persistent hiring difficulties, which could impact expansion plans for the nursing care/medical business segment without the successful scaling of the new low-specialized-labor operating model.

Q: What is the progress of the first year of the mid-term management plan, and is a full plan revision likely at this stage?

A: Renaissance confirms the first year of the mid-term plan delivered solid, on-track results. The acquisition of OASIS was successfully integrated, with core targets for membership growth, revenue expansion, and synergy foundation all achieved. Management does not see a need for full plan revision at this point, and will continue dynamic resource adjustment to hit 2027 targets.

Q: What is the long-term growth outlook for the home fitness business after the OASIS acquisition?

A: Management expects continued stable growth for the segment. Core products have already outperformed initial forecasts, and cross-business synergies with Renaissance's preventive and clinical health expertise will enable new product development targeting older and clinical customer segments. The segment will continue to expand its e-commerce and wholesale distribution network.

Q: What synergies have been realized from the OASIS integration so far, and what is the timeline for full synergy capture?

A: Immediate revenue synergies have already been captured from adding OASIS's membership and home fitness revenue. Current work is focused on brand rebranding and operational integration, with cross-selling of OASIS corporate content and new co-developed products expected to deliver incremental synergies over the next 1-2 years. Cost synergies from operational consolidation are also progressing within the original PMI budget.

Q: What is the hiring outlook for specialized staff at Genki Jim, and how will the company address labor shortages?

A: Genki Jim has already developed and piloted a new operating model that reduces reliance on hard-to-hire specialized nursing and rehabilitation staff. The model has proven successful at the two newly opened locations, and the company will scale this model for future openings to mitigate hiring risk while expanding the segment to meet unmet market demand.