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365MC (CEO Kim Nam-cheol, located at 4th Floor, Jeil Building, 52 Seocho-daero, Seocho-gu, Seoul), a leading medical franchise for liposuction in Korea, received an ironic report card for last year: "growth in scale but collapse in substance," as it reported a 50.6% jump in revenue year-on-year while simultaneously swinging to an operating loss.

 

The direct hit came as selling, general, and administrative (SG&A) expenses completely swallowed up the gross profit, with advertising and promotion expenses alone surging by a staggering 148.1% to reach 7.8 billion KRW. Concerns about financial health are also rising, with internal transactions with related parties (e.g., franchise clinics operated by the CEO) accounting for 20.7% of total revenue and short-term borrowings jumping to 5.4 billion KRW.

 

Given that the auditor, Hanshin Accounting Corporation, explicitly noted related-party transactions in the 'Emphasis of Matter' section of the audit report to alert users, fundamental questions are being raised about whether the company's growth formula is truly sustainable.

 

Behind Revenue Growth... Profits Have Vanished

 

According to the 20th audit report (for the period of January 1, 2025 – December 31, 2025) of 365MC, filed with the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART) on April 3, the company's revenue in 2025 was 27.22 billion KRW, a 50.6% increase from the previous year (18.068 billion KRW).

Looking at the revenue composition, service revenue from franchise clinics and hospitals accounted for 23.479 billion KRW, or 86.3% of total revenue, followed by rental income of 1.205 billion KRW and merchandise sales of 2.497 billion KRW.

 

However, top-line growth did not translate into bottom-line performance. Operating profit was negative 55.57 million KRW (operating loss), a complete turnaround from the previous year's operating profit of 2.799 billion KRW. The operating profit margin is negative 0.2%. Net loss was 205.51 million KRW, also shifting from the previous year's net profit of 1.08016 billion KRW. The net loss per share was 11 KRW (compared to a net profit per share of 56 KRW the previous year).

 

In response, 365MC explained, "We made proactive investments for future growth, including advertising, personnel, and R&D, alongside revenue growth, which led to a temporary decrease in operating profit. We believe these costs will lead to an expanded revenue base and strengthened brand competitiveness in the future."

 

Pain Point ①: Advertising Expenses Surge 148%, the Counterattack of 'Brand Gambling'

 

The core reason for the collapse in the profit structure is the explosive expansion of SG&A expenses. In 2025, total SG&A expenses were 24.79975 billion KRW, a 72.8% surge from the previous year (14.35532 billion KRW), which exceeds the gross profit of 24.74418 billion KRW by 55.57 million KRW. In other words, the company spent all the money it earned on expenses and still fell short.

 

Breaking it down by item, the most notable factor is that advertising and promotion expenses surged by a massive 148.1%, from 3.14446 billion KRW last year to 7.80279 billion KRW this year. This amounts to 28.7% of the 27.2 billion KRW in revenue, meaning the company spent 1 KRW in advertising to earn 3.5 KRW in revenue.

 

Salaries also increased by 79.1% to 8.33526 billion KRW from the previous year (4.65374 billion KRW), and commissions paid remained high at 4.30457 billion KRW (compared to 3.78533 billion KRW last year, +13.7%). Ordinary R&D expenses surged by 173.7% to 703.37 million KRW from the previous year (256.98 million KRW), visualizing expenditures for new bio and stem cell projects.

 

Regarding this, 365MC explained, "2025 was a period of intensive marketing investment to expand brand awareness and attract new customers. The increase in advertising expenses was a strategically planned execution, and we are confirming results in securing a base for new customer inflow and revenue growth," adding, "We plan to gradually stabilize this by considering investment efficiency in the future."

 

Pain Point ②: Cash is Drying Up, Borrowings are Swelling

 

Operating cash flow turned negative at 1.6131 billion KRW, reversing from the previous year's positive 1.2883 billion KRW. Cash and cash equivalents plummeted by 43.0% from 889.67 million KRW at the end of the previous year to 507.59 million KRW at the end of 2025.

 

It is also noteworthy that short-term borrowings were increased sharply to fill the funding gap. Short-term borrowings surged by 56.6% from 3.45 billion KRW in the previous year to 5.40341 billion KRW this year. By lender, it consists of general loans from Shinhan Bank amounting to 5.35341 billion KRW (interest rates 3.68–4.89%) and 50 million KRW from Truevest (interest rate 4.60%).

 

For these borrowings, the company provided land and buildings located in Seocho-gu, Seoul as collateral (collateral amount 2.4 billion KRW), and a joint guarantee by CEO Kim Nam-cheol (guarantee amount 4.47 billion KRW) is tied to it. Current liabilities of 7.20647 billion KRW exceed current assets of 5.14514 billion KRW by more than 2 billion KRW, resulting in a current ratio of only 71.4%. The ability to meet short-term debt obligations is flashing red.

 

Pain Point ③: Related-Party Transactions Surge 60%, Auditor Also Issues 'Warning'

 

In this audit report, the auditor, Hanshin Accounting Corporation, explicitly mentioned related-party transactions as an 'Emphasis of Matter,' which does not affect the audit opinion (unqualified). The audit report stated, "During the current period, the company had sales and purchases, etc., with related parties such as the CEO, amounting to 5.63962 billion KRW and 15.93 million KRW, respectively. As a result, as of the end of the reporting period, there are receivables of 1.07629 billion KRW from related parties."

 

Sales transactions with related parties surged by 60.4% from 3.51559 billion KRW the previous year to reach 20.7% of total revenue. Counterparties include 365MC Busan Hospital operated by CEO Kim Nam-cheol (2.87646 billion KRW), 365MC Clinic Gangnam Main Branch operated by executive Kim Jung-eun (1.39572 billion KRW), and 365MC Clinic of executive Chae Gyu-hee (840.8 million KRW). A structure where more than one-fifth of the headquarters' revenue is accounted for by franchise clinics in which company management holds equity is a point that could raise questions about the fairness of internal transactions.

 

In addition, the company disclosed in the notes that it has entered into franchise agreements to receive royalty fees from franchise clinics such as 365MC Seoul Hospital and overseas investment entities including the Indonesian subsidiary (PT. Akasia threesixfivemc Indonesia) and the Thai subsidiary (APEX 365MC THAILAND COMPANY LIMITED). However, the specific scale of royalty income is difficult to verify as it is not separately disclosed in the income statement.

 

Regarding related-party transactions, liquidity, financial structure, and operating cash flow, 365MC explained, "Our related-party transactions are conducted under general standards and conditions, and we manage fairness through relevant internal control procedures. Although there were some fluctuations in financial indicators due to short-term overseas branch and internal infrastructure improvements, we are managing liquidity based on stable cooperative relationships with financial institutions and plan to continuously strengthen financial stability through future cash flow improvements. The decrease in operating cash flow is a result of reflecting the increase in working capital and investment execution during the business expansion process."

 

Pain Point ④: Rush of New Business Investments, Lineup of Impairment Losses

 

In 2025, the company made aggressive bets on global and new business expansion. It newly established/invested in the US subsidiary 365MC INC (100% stake, acquisition cost 279.39 million KRW) and the 365MC Fat Stem Cell Research Institute (100% stake, acquisition cost 100 million KRW), and also added 600 million KRW to the existing 2.8 billion KRW investment in its 100% subsidiary, Silopangpang Co., Ltd.

 

However, a significant portion of the invested equity securities has already suffered impairment. In 2024, the company recognized an impairment loss on available-for-sale securities of 359.57 million KRW for stocks in four companies: AVELLINO LAB USA INC., Veno Bio Co., Ltd., Bibliotheca Co., Ltd., and Health Kyunghyang Co., Ltd. Following this, in 2025, it additionally recognized an impairment loss of 100.09 million KRW for stocks in Icrogene Co., Ltd. It appears that a series of companies in the investment portfolio have been judged to have no possibility of recovery due to a decline in net asset value.

 

The balance of retained earnings is 10.10763 billion KRW.

 

A corporate financial analysis expert analyzed, "The fact that it posted an operating loss even though revenue jumped more than 50% is not just a problem of temporary cost concentration, but reveals the structural vulnerability of a 'marketing-dependent growth model' that pours 28.7% of revenue into advertising alone," adding, "The fact that short-term borrowings surged by 56.6% in a situation where operating cash flow turned negative means it is 'buying growth with debt, not profit'."

 

The expert also pointed out, "2026, when the stress of debt repayment will increase, could be a much more dangerous year. In a structure where related-party transactions account for one-fifth of revenue, the auditor's explicit mention as an 'Emphasis of Matter' is a warning that it is difficult to avoid the market's gaze on the fairness of internal transactions and the possibility of profit shifting," and "Although the company has expanded its investments omnidirectionally, from US, Indonesian, and Thai subsidiaries to a new stem cell research institute, impairment losses are already occurring in many equity holdings, so there is a persistent risk that financial health will deteriorate rapidly without a transition to profitability in top-line growth."

 

Regarding other individual inquiries, 365MC stated, "It is difficult to disclose details as they include parts related to current business strategy and internal operational information," adding, "We plan to continue to provide information transparently through future disclosures and official materials."