FY2016(Fiscal Year Ending March 31, 2017)

Financial Results（ Securities code： 4775 ）Contact
SOGO MEDICAL CO., LTD

Public Information and Investor Relations Division
Explanation of the appropriate use of financial result forecasts.

Tel: +81-92-713-9181 Fax: +81-92-713-7616
E-mail: ir@sogo-medical.co.jp

These financial result forecasts are based on currently available information.
Actual financial results could differ from these forecasts due to various factors.
（ The amounts are rounded down. ）These presentation materials have been releasedon the following web page:
URL : http://www.sogo-medical.co.jp/english/

Ⅰ. FY2016 Financial Results1Consolidated financial results
Net sales ¥ 122,216million （up 1.2％ Y/Y）, Ordinary income ¥ 6,440 million （up 3.9％ Y/Y）
✔ Achieved 16th consecutive fiscal year of sales growth since listing Operating and ordinary income increased year-on-year for the fourth consecutive fiscal year while profit attributable toowners of the parent grew for the first time in three fiscal years.
 We recorded all-time highs for operating and ordinary income, and profit attributable to owners of the parent.
（\millions）

FY2012FY2013

FY2014FY2015FY2016 plan

FY2016Year-on-year
ChangeOver plan

Change (%)

ChangeChange (%)

Net Sales

86,658103,318

107,945

120,776

126,507122,216

1,440

1.2%

-4,291-3.4%

Operating income

4,324

5,014

5,017

6,087

6,005

6,248

161

2.6%

243

4.0%

Ordinary income

4,343

5,068

5,227

6,196

6,020

6,440

244

3.9%

420

7.0%

Proﬁt attributable to owners of parent

2,532

2,856

2,774

2,318

3,730

3,779

1,461

63.0%

49

1.3%

9.2

8.8

8.9

9.1

-

9.1

0.0

-

-

-

175.4

197.8

192.2

154.6

248.8

252.5

97.9

63.3%

3.7

1.5%

EBITDA margin
Net income per share (\)* Dated April 1, 2015, Sogo Medical has instituted a 2-for-1 common stock split. Net income per share for fiscal years ended March 31, 2015, and before have been calculated adjusted for the stock split.
* EBITDA Margin=EBITDA / Sales
EBITDA=Operating income ＋ Depreciation Expense ＋ Amortization of goodwill

Net Sales
Ordinary income

103,318

120,776

122,216

6,196

6,440

FY2015FY2016

107,945

86,6584,343

FY2012SOGO MEDICAL CO.,LTD. All Rights Reserved

5,068

5,227

FY2013

FY20142

FY2016 Net sales / operating income (by business)✔ In the medical practice support business, we posted a rise in sales and operating income year-on-year but in the pharmacy
business, we booked a decline in sales and operating income due to negative impact from revisions of NHI drug prices anddispensing fees.

（\millions）

FY2014FY2015FY2016

107,945

120,776

122,216

1,440

1.2

25,811

23,30225,3052,002

8.6

Consulting

1,693

1,894

2,035

140

Rental

5,922

5,465

6,836

1,370

25.1 Sales of rental contracts* +1,203, Rental sales +167

15,243

11,035

10,153-882-8.0 Sales of leasing contracts* -916

Others

2,952

4,905

6,280

1,374

28.0 hospitals, clinics and assisted living facilities +306, Healthcare information service +255,

Pharmacies

80,66096,40595,966-438-0.5 Pharmacies opened in FY2016 +3,755 , including Hepatitis C treatments -2,246

1,473

1,068

944

-124

-11.6

5,017

6,087

6,248

161

2.6

Medical practice support

1,005

137

738

601

Pharmacies

4,805

6,655

6,316

-338

Others

-123

-114

-52

61

Reconciliation

(670)

(591)

(754)

-163

Net sales
Medical practice support

Leasing/Installment

OthersOperating income

ChangeMain factors

Change (％)

7.4 Consulting fees +251, Transfer/Start-up supporting fees -111

Installation and maintenance of medical equipment +616, Design and construction ofSales at paramedical staff introduction and dispatch operations +104
Existing pharmacies -5,572, Pharmacies opened in FY2015 +1,523,

437.3 Increase in rental sales-5.1

Net sales were down due to revisions to dispensing fees and drug
prices－ Increase in sales of Healthcare information setvice, etc.
－ M&A-related expenses* Sales are recognized when the company sells leasing contracts and rental contracts to other leasing companies. The company receives lease payments from the original lessee on behalf of the leasing companies,
and pays the lease payments to the leasing companies. The companyʼs income from sales is the difference between the sales price to the leasing companies and the purchase price from suppliers of underlying assets.

SOGO MEDICAL CO.,LTD. All Rights Reserved

3

FY2016 Net sales / operating income (by region)✔ In Higashinihon (east Japan), sales and operating income increased in contrast with the previous year. In Nishinihon (westJapan), sales fell while operating income rose. Meanwhile, in Kyushu, although sales rose in the medical practice support business,sales in the pharmacy business dropped sharply, dragging down operating income.
（\millions）

FY2014FY2015FY2016

107,945

120,776

122,216

1,440

1.2

39,614

43,83848,054

4,215

9.6

8,617

7,750

8,969

1,219

15.7 living facilities +109

30,99736,08839,0842,996

8.3 pharmacies was offset by sales growth driven by pharmacies opened in FY2016.

28,20533,17632,463

-713

-2.1

8,420

6,765

6,254

-511

-7.6 Rental +456, Leasing/Installment -1,119

19,784

26,41026,208-202-0.8 pharmacies opened in FY2016.

37,79339,90537,541-2,364

8,040

6,077

7,001

924

29,75233,82830,539-3,288

2,331

3,855

4,157

301

7.8

Operating income

5,017

6,087

6,248

161

2.6

Higashinihon

842

1,228

1,408

179

14.6 Medical practice support +225, Pharmacies +176, SG&A and others -257

Nishinihon

1,510

2,082

2,197

115

5.5 Medical practice support +188, Pharmacies -40

Kyushu

2,643

2,854

2,576

-277

-9.7 Medical practice support +97, Pharmacies -326

Others

620

490

856

365

74.6 dispatch operations

(599)

(568)

(790)

-221

Net sales
Higashinihon
Medical practice support
Pharmacies
Nishinihon
Medical practice support
Pharmacies
KyushuMedical practice support
Pharmacies
OthersReconciliation

SOGO MEDICAL CO.,LTD. All Rights Reserved

ChangeMain factors

Change (％)

Rental +566,Consulting fees +222, Design and construction of hospitals, clinics and assisted
The negative impact from revisions of NHI drug prices and dispensing fees at existing

The decline in sales at existing pharmacies overshadowed the sales growth owing to-5.9
15.2 Rental +304, Installation and maintenance of medical equipment +616
At existing pharmacies, sales declined reflecting a substantial decline in prescriptions for-9.7 Hepatitis C treatments and NHI drug price revisions.

Increase in sales of Healthcare information setvice, and Paramedical staff introduction and－ M&A-related expenses

4Medical practice support (Consulting)
Points✔ Sales of general consulting services increased 20.4% compared with FY2015 to ¥1,483 million due to higher income from hospital bed reorganization
consulting and facility leases such as healthcare malls.
✔ Fees from practice transfer/start-up support decreased 16.8% compared with FY2015 to ¥551 million.
✔ The number of doctors wishing to transfer/start-up practice using the DtoD System has increased by 6,730 persons compared with the end of the previous
fiscal year to 69,159 persons.
✔ We opened ten healthcare malls, putting the total number of healthcare malls to 75 at the end of FY2016. We also assisted in the opening of 46 medical
practices carried on by successors.
Practice transfer support (instances)

Consulting sales (\millions)
FY2013

FY2014FY2015FY2016

ChangeFY2013

Change (％)-680-11.6%

Full time

95

86

90

66

-24

-26.7%Part time

4,971

5,449

5,773

5,117

-656

-11.4%

140

7.4%

Transfer support

1,044

1,061

1,232

1,483

251

20.4%

628

632

662

551

-111

-16.8%

Transfer support

425

440

435

347

-87

-20.2%Start-up support

134

131

170

152

-17

-10.3%

67

59

57

51

-5

-10.0%

advertising

Succeed Members

Healthcare mallprovide business information related to private practice.

(Number at the end of the fiscal

FY2014FY2015FY2016

ChangeChange (％)

1,639

1,666

27

1.6%

Hospital

607

651

679

703

24

3.5%

Clinic

767

796

832

830

-2

-0.2%

118

120

128

133

5

3.9%

othersNumber of doctors wishing to transfer/start-up a practice using the DtoD System (instances)

Doctors registered

48,430FY201456,505SOGO MEDICAL CO.,LTD. All Rights Reserved

FY201562,429FY2016

69,159FY2015FY2016

ChangeChange (％)

41

53

65

75

10

15.4%

5

12

12

10

-2

-16.7%

80

50

74

46

-28

-37.8%

Result for each fiscal year
Support of medical practices
carried on by successors

Lease contracts through practice start-up support
FY2013
Lease contracts throughFY2013

FY2014

year）

1,567

Employed physicians,/ Support of medical practices carried on by successors"Succeed Members" is a membership system through which we

1,492

Total

Healthcare mall
FY2013

FY2013

Change (％)

5,183

2,035

DtoD concierge

Change

5,863

1,894

Transfer/start-up support

FY2016

5,535

1,693

Consulting

FY2015

5,066

1,672

Total

FY2014start-up support (\millions)

6,730

Change (％)

FY2015FY2016

ChangeChange (％)

1,864

1,580

1,622

1,603

-19

-1.2%

15.9%

15.9%

16.3%

17.8%

1.5%

－

Lease contracts throughpractice start-up support toChangeFY2014

total lease contracts

10.8%

5

Medical practice support (Rental, Leasing/Installment)
Points✔ Rental sales increased 25.1% compared with FY2015 to ¥6,836 million.
✔ Current lease contracts totaled ¥9,008 million, a decline of 9.3% year-on-year due to negative impact from a negative interest rate,etc.

Rental（Rental of television sets to inpatients）

Leasing/Installment（Lease and installment sales of medical equipment）
Leasing sales （\millions）

Rental sales （\millions）
FY2013

FY2014FY2015FY2016FY2013
Change

5,914

5,922

5,465

6,836

1,370

25.1%

Sales of rental contracts*

1,650

1,728

800

2,003

1,203

150.3%

Rental

4,263

4,193

4,665

4,832

167

3.6%

Total

Rental assets

Rental assets （\millions）
Number of rental TVs（in thousands）

FY2014FY2015FY2016

ChangeChange (％)

6,871

5,929

5,177

4,823

-354

-6.9%

133

132

148

146

-2

-1.4%

The Tokyo 2020
Olympic andParalympic games

-882

-8.0%

9,824

8,622

8,690

7,774

-916

-10.5%

Leasing

954

945

867

711

-156

-18.0%

Installment

568

514

554

597

43

7.8%

7,767

5,159

923

1,070

146

15.9%

Sales of leasing contracts*

Lease assets （\millions）
FY2013

installment sales

2019/32020/32021/3

FY2015FY2016

ChangeChange (％)

3,508

3,277

2,732

-543

-16.6%

2,014

1,701

1,403

911

-491

-35.1%

1,687

1,806

1,874

1,821

-52

-2.8%

Lease contracts

The company's lease contracts

2018/3

FY20143,702

FY20132017/3

Change (％)

10,153

investment assets
Accounts receivable

The period for TV set rental contracts is 5-7 years.
The majority of these contracts will come to term in 2017-2018.

Change11,035

Lease receivables andPeak for replacement demand

FY2016

15,243Total

Forecast for rental business

Replacement of
TV sets

FY2015

19,113

Total

Sales of medical equipment

FY2013

FY2014

Change (％)（\millions）
Medical equipment lease contracts in Japan（\100millions） **FY2014FY2015FY2016

ChangeChange (％)

11,670

9,928

9,937

9,008

-929

-9.3%

3,022

2,278

2,485

2,529

44

2.0%

*

Sales are recognized when the company sells leasing contracts and rental contracts to other leasing companies. The company receives lease payments from the original lessee on behalf of the leasing companies, and pays the lease
payments to the leasing companies. The companyʼs income from sales is the difference between the sales price to the leasing companies and the purchase price from suppliers of underlying assets.
** Source: Lease Statistics （Japan Leasing Association）We estimated leasing sales for March 2017.

SOGO MEDICAL CO.,LTD. All Rights Reserved

6Pharmacies (Sales/Number of pharmacies)
Points✔ Dispensing sales totaled ¥94,467 million, a decrease of 0.7% year-on-year. Although sales were buoyed by pharmacy
openings in FY2015 and FY2016, this did not compensate for the decline in sales at existing pharmacies.
✔ Sales at existing pharmacies declined 6.3% versus the same period a year earlier due to a sharp fall in prescriptions forhepatitis C drugs and negative impact from revisions to NHI drug prices and dispensing fees.
✔ 105 new pharmacies（including 92 pharmacies in M&A）openings lifted the total to 674.

Dispensing pharmacies

Pharmacy sales（\millions）
FY2013

FY2014FY2015FY2016

72,17180,66096,40595,966

-438

-0.5%

71,00879,271

95,11994,467

-652

-0.7%

Prescription drugs

53,06359,346

72,60970,501-2,108-2.9%

Dispensing technical fees

17,94519,92522,51023,966

1,455

6.5%

1,162

1,388

1,285

1,499

213

16.6%

Total
Dispensing

Non-prescription drugs

ChangeDispensing sales （\millions）
FY2013

FY2014FY2015FY201671,00879,271

95,11994,467

-652

-0.7%

69,486

77,95988,42882,856-5,572-6.3%

Open in FY2015

-

-

6,009

7,532

1,523

25.3%

Open in FY2016

-

-

-

3,755

3,775

-

1,522

1,312

682

322

-360

-52.8%

Total
Existing pharmacies

Closed pharmacies

SOGO MEDICAL CO.,LTD. All Rights Reserved

ChangeFY2013

Change (％)

Change (％)

Pharmacies

493

FY2014FY2015538

576

FY2016

Change674

98

Change (％)

17.0%

Newly open pharmacies
FY2013

FY2014FY2015FY2016

ChangeChange (％)

New pharmacies

78

48

47

105

58

123.4%

organic

45

39

22

13

-9

-41.0%

including new client

28

20

12

8

-4

-33.3%

including existing client

17

19

10

5

-5

-50.0%

33

9

25

92

67

268.0%

including M&A

7

FY2016 financial positions（\millions）
FY2014
Total assets
Current assets（Cash and deposits）（Notes and accounts receivable-trade）

FY2015FY2016Main factors

Change69,811

74,62186,76012,13836,584

39,18944,999

5,809

4,988

6,376

10,8304,454

17,485

19,617

21,395

1,777 Accounts receivables in the pharmacy business increased（Inventories）

7,543

6,583

6,557

-26

Noncurrent assets

33,22635,431

41,7606,329

21,801

23,54225,072

1,529

6,283

7,034

11,241

4,206 Goodwill +3,870（Property, plant and equipment）（Intangible assets）

43,29044,97553,8798,903

Current liabilities

30,10931,23733,2281,990（Notes and accounts payable-trade）

18,841

18,59020,258

1,667

2,903

4,046

4,607

560

13,18013,737

20,650

6,913（Long-term loans payable）

6,835

9,204

15,171

5,966 New loans payable increased（Long-term accounts payable-installment purchase）

3,055

1,938

2,160

222

16,572

18,447

24,5906,143

Total net assets

26,52129,64632,8803,234 Net income +3,779, Dividend payment -710

Total liabilities and net assets

69,811

74,62186,76012,138

Net assets per share (\)

Total liabilities（Current portion of long-term loans payable）
Noncurrent liabilities（Interest-bearing debts）

1,824.1

1,967.1

2,178.4

211.3

Capital adequacy ratio (%)

37.7

39.5

37.6

-1.9

Net Ｄ／Ｅ ratio (times)

0.44

0.41

0.42

0.01

*Net D/E ratio ＝ Net interest-bearing debts (Interest-bearing debts－Cash and deposits) / Shareholdersʼ equity
Interest-bearing debts include lease obligations and accounts payable-installment purchase.
*Dated April 1, 2015, Sogo Medical has instituted a 2-for-1 common stock split. Net assets per share for fiscal years ended March 31, 2015, and before has been calculated
adjusted for the stock split.
SOGO MEDICAL CO.,LTD. All Rights Reserved

8

FY2016 cash flows（\millions）
FY2014FY2015FY2016Main factors

Change

6,051

7,004

10,931

3,926（Income before income taxes and minority interests）

5,175

4,824

6,391

1,567

(Depreciation)

3,746

3,836

3,902

65

51

1,014

48

-965

805

1,021

987

-34

（Decrease (increase) in notes and accounts receivable-trade）

1,050

-993

1,127

2,121

（Income taxes paid）-2,108-2,559-2,222337

Net cash used in investing activities-5,296-4,981-9,933-4,951（Purchase of own-used assets）-3,767-4,233-3,152

1,081（Purchase of property for lease）

-359

-876

-264

612

（Purchase of investments in subsidiaries resulting in change in scope of consolidation)

-579

-147

-6,440-6,293 M&A of pharmacies-1,637

-635

3,301

3,937

（Proceeds from long-term loans payable）

4,749

6,485

10,9334,448 Newly loans payable increased（Repayment of long-term loans payable）-3,211-3,001-4,446-1,445

-512

-751

-324

427

-2,094-2,092-1,924

167

-1

-708

-

708

-577

-629

-710

-81

Net increase in cash and cash equivalents

-882

1,387

4,299

2,912

Cash and cash equivalents at end of period

4,968

6,356

10,6554,299

Investment in plant and equipment-4,127-5,110-3,416

1,693

Net cash provided by operating activities（Impairment loss）（Amortization of goodwill）

Net cash used in ﬁnancing activities（Repayments of lease obligations）（Repayments of installment payables）（Purchase of treasury stock）（Cash dividends paid）

SOGO MEDICAL CO.,LTD. All Rights Reserved

9Financial indicators
FY2012FY2013

FY2014FY2015FY2016\175.41\197.82\192.20¥154.65¥252.52

ROA

7.9%

8.2%

7.6%

8.6%

8.0%

ROE

12.3%

12.6%

11.0%

8.3%

12.2%

9.2%

8.8%

8.9%

9.1%

9.1%

ROI

12.3%

13.0%

12.4%

14.6%

12.7%

PBR

1.1

1.2

1.8

1.9

1.9

PER

9.5

10.5

17.6

24.7

16.6

37.8%

35.7%

37.7%

39.5%

37.6%

Net D/E

0.43

0.40

0.44

0.41

0.42

Dividend per share

\40

\40

\40

¥45

¥50

22.8%

20.2%

20.8%

29.1%

19.8%

Net income per share

Proﬁtability

EBITDA margin

Investment

SafetyDividend

Capital adequacy ratio

Dividend payout ratio* ROA=Ordinary income / Average of total assets
Average of total assets＝(Total assets at the beginning of FY + Total assets at the end of FY) /2* EBITDA Margin=EBITDA / Sales
EBITDA=Operating income ＋ Depreciation Expense ＋ Amortization of goodwill* ROI=(Ordinary income＋Interest expense・Discount expense) / (Interest-bearing debts＋Shareholdersʼ equity)* PBR=The market capitalization / Net assets at the end of FY
The market capitalization＝(Number of shares issued at the end of FY－Number of treasury stocks at the end of FY)×Stock price at the end of FY* PER= The market capitalization / Net income* Net D/E= Net interest-bearing debts (Interest-bearing debts－Cash and deposits －negotiable deposits) / Shareholdersʼ equity Interest-bearing debts include lease obligations andaccounts payable-installment purchase.
* Dated April 1, 2015, Sogo Medical has instituted a 2-for-1 common stock split. Net income per share, PBR, PER, and Dividends per share for fiscal years ended March 31, 2015,
and before have been calculated adjusted for the stock split.

SOGO MEDICAL CO.,LTD. All Rights Reserved

10

FY2016 operating results by region
Number of doctors wishing totransfer/start-up a practice using the
DtoD System by region

Kyushu27%

Higashinihon
Kyushu13%

Nishinihon

Pharmacies

333

173

168

Higashinihon

Nishinihon

60%

Number of doctors

Pharmacies

wishing to transfer/start-up

Transfer supporta practice using the DtoD System(instances) *2

Healthcare mall

Succeed Members

Open in FY2016（M&A）(instances) *1

67,769

5,182

75

1,666

674

105（92）

Higashinihon

40,759

2,065

39

408

333

94（85）

Nishinihon

18,071

2,294

20

457

173

8 （6）

Kyushu

8,939

823

16

801

168

3 （1）

Total

*1 In total 69,159 doctors were registered, including 1,390 doctors not registered in a specific region.
*2 Projects in more than one region are rounded down.

SOGO MEDICAL CO.,LTD. All Rights Reserved

11Quarterly financial results (by business)（\millions）

FY2014FY2015FY2016

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

24,896

26,84527,26828,93327,506

29,511

31,45332,304

28,102

29,217

29,38835,507

5,474

7,150

5,857

7,328

5,387

5,926

5,606

6,382

5,179

6,383

5,412

8,329

334

419

370

569

377

513

415

588

461

499

447

625

Rental

1,085

1,499

1,265

2,071

1,345

1,643

1,162

1,314

1,492

1,851

1,391

2,100

Leasing/Installment

3,275

4,491

3,604

3,871

2,567

2,673

2,690

3,104

2,280

2,399

1,911

3,562

778

739

617

816

1,097

1,095

1,337

1,375

945

1,632

1,661

2,041

19,07019,31921,032

21,23821,75323,32625,62025,705

22,69922,59923,73826,929

351

376

379

366

366

258

226

216

223

234

237

248

Cost of sales

21,61823,614

23,57324,33323,65325,365

26,84327,31424,026

24,96924,74630,019Gross proﬁt

3,278

3,230

3,695

4,600

3,853

4,146

4,609

4,989

4,076

4,247

4,641

5,488

SG & A

2,507

2,455

2,413

2,411

2,891

2,891

2,794

2,933

2,951

2,940

2,964

3,350

770

775

1,282

2,189

961

1,255

1,814

2,055

1,125

1,307

1,677

2,137

-98

284

81

737

-98

111

-334

459

81

84

126

446

1,073

688

1,375

1,668

1,244

1,328

2,252

1,829

1,198

1,378

1,730

2,009

-36

-27

-19

-39

-35

-21

-14

-42

-29

-8

-10

-3

Reconciliation

(168)

(169)

(155)

(177)

(149)

(163)

(88)

(189)

(125)

(145)

(168)

(315)

Ordinary income

848

808

1,345

2,225

1,000

1,280

1,848

2,066

1,101

1,311

1,723

2,303

Proﬁt attributable to owners of parent

471

390

796

1,116

544

509

1,063

200

616

764

982

1,416

Net income per share (\)

32.6

27.1

55.1

77.4

37.4

33.6

70.6

13.0

41.1

51.0

65.6

94.7

Net sales
Medical practice support
Consulting

OthersPharmacies
OthersOperating income
Medical practice support
Pharmacies
Others* Dated April 1, 2015, Sogo Medical has instituted a 2-for-1 common stock split. Net income per share for fiscal years ended March 31, 2015, and before has been calculated adjusted for the stock split.

SOGO MEDICAL CO.,LTD. All Rights Reserved

12Quarterly data summary（\millions）

FY2014
1Q

2Q

FY2015
3Q

4Q

1Q

2Q

FY2016
3Q

4Q

1Q

2Q

3Q

4Q

Consulting sales

334

419

370

569

377

513

415

588

461

499

447

625

Consulting

220

267

265

307

255

349

295

332

365

367

341

409

Practice transfer/start-up support

114

152

104

261

122

164

120

256

95

132

106

216

Practice transfer support

83

103

61

193

84

97

75

178

59

76

59

151

Practice start-up support

15

34

28

52

22

53

27

66

22

43

35

51

DtoD-concierge advertising

15

14

14

15

14

13

16

11

13

12

12

13

2,820

1,718

1,977

1,560

840

1,887

1,621

1,576

1,933

1,281

1,800

1,716
1,237

Number of doctors wishing to transfer/start-up
a practice using the DtoD System （instances）
Practice transfer support （instances）

1,247

1,396

1,562

1,330

1,434

1,475

1,652

1,302

1,348

1,220

1,378

Full time

14

18

7

47

14

20

11

45

8

16

7

35

Part time

1,233

1,378

1,555

1,283

1,420

1,455

1,641

1,257

1,340

1,204

1,371

1,202

Support of medical practices carried on by successors

Rental sales
Sales of rental contracts*

18

12

8

12

23

11

20

20

17

10

9

10

1,085

1,499

1,265

2,071

1,345

1,643

1,162

1,314

1,492

1,851

1,391

2,100

67

406

229

1,024

279

433

86

0

314

587

216

885

1,017

1,093

1,036

1,046

1,065

1,209

1,075

1,314

1,178

1,263

1,175

1,214

Lease contracts

1,389

2,703

2,339

3,495

2,295

2,407

2,397

2,837

2,059

2,119

1,556

3,272

Leasing sales

3,275

4,491

3,604

3,871

2,567

2,673

2,690

3,104

2,280

2,399

1,911

3,562

1,245

2,275

1,961

3,139

1,946

2,160

2,213

2,369

1,764

1,911

1,389

2,709

Leasing

236

239

230

238

222

220

203

220

183

179

165

182

Installment

121

125

132

134

136

139

137

140

147

151

153

144

1,672

1,849

1,280

357

261

152

135

373

184

157

202

525

508

525

530

538

567

574

575

576

578

580

672

674

15

17

7

9

35

7

1

4

4

3

95

3

2,201

2,166

2,361

2,368

2,388

2,412

2,594

2,644

2,544

2,508

2,712

3,050

RentalSales of leasing contracts *Sales of medical euipment
Dispensing pharmacies (Pharmacies)
New open
Number of prescriptions （in thousands）* Sales are recognized when the company sells leasing contracts and rental contracts to other leasing companies. The company receives lease payments from the original lessee on behalf of the leasing companies, and pays thelease payments to the leasing companies. The companyʼs income from sales is the difference between the sales price to the leasing companies and the purchase price from suppliers of underlying assets.

SOGO MEDICAL CO.,LTD. All Rights Reserved

13

Ⅱ. FY2017 Financial Result Forecasts

14

FY2017 Segment targets
Aim to open 25 healthcare malls, and open 18 pharmacies.

Healthcare mall
(Number at the end of the ﬁscal year）

Result for each fiscal year
Pharmacies(Number at the end of the ﬁscal year）

New pharmacies（include M&A in results）

FY2013

FY2014FY2015FY2016FY2017

Results

Results

Results

Results

Targets

41

53

65

75

100

5

12

12

10

25

493

538

576

674

692

78

48

47

105

18

＊New pharmacy opening plans for FY2017 do not include M&A deals

SOGO MEDICAL CO.,LTD. All Rights Reserved

15

FY2017 Financial result forecasts（\millions）
FY2016
Interm

FY2017 Forecast

Full Year

IntermChangeFull Year

IntermInterm (%)

Full Year

Full Year (%)

57,320122,216

64,899135,566

7,579

13.2%

13,35010.9%

11,56325,305

12,76728,150

1,204

10.4%

2,845

11.2%

961

2,035

1,019

2,455

58

6.0%

420

20.6%

Rental

3,343

6,836

3,613

7,587

270

8.1%

751

11.0%

Leasing/Installment

4,680

10,153

4,755

10,422

75

1.6%

269

2.6%

Others

2,577

6,280

3,379

7,686

802

31.1%

1,406

22.4%

Pharmacies

45,29895,966

51,625

106,386

6,327

14.0%

10,420

10.9%

Others

458

944

506

1,030

48

10.5%

86

9.1%

Gross proﬁt

8,324

18,454

9,229

20,165

905

10.9%

1,711

9.3%

SG & A

5,891

12,206

6,623

13,164

732

12.4%

958

7.8%

Operating income

2,432

6,248

2,605

7,001

173

7.1%

753

12.1%

Ordinary income

2,413

6,440

2,608

7,016

195

8.1%

576

8.9%

Proﬁt attributable to owners of parent

1,380

3,779

1,434

4,029

54

3.9%

250

6.6%

92.2

252.5

95.8

269.1

3.6

-

16.6

-

Net sales
Medical practice support
Consulting

Net income per share (\)

SOGO MEDICAL CO.,LTD. All Rights Reserved

16

Ⅲ. FY2016 Medium-Term Management Plans

17

Medium-term management plan (April, 2014 –March, 2017)“Further Challenge”-Toward a better society in which people can live with a sense of securityWe are striving to build a platform for regional healthcare networks
by leading the industry with our DtoD (Doctor to Doctor) system and high-value pharmacies.

Main priority initiatives

1

Undertaking New Businesses

We will provide support for managing and coordinating medical services ranging from acute medicalcare to in-home care to help build a platform for regional healthcare networks.

●We offer medical management support to major regional medical institutions.
●We provide support for coordinating medical services between major medical institutions andsmaller medical institutions and institutions that provide in-home care for elderly people.

2

Improving Existing Businesses●Medical practice support●Pharmacies

3

P.19

We will provide medical support based around DtoD systems by constructing ideal healthcare malls, enhancing
support for starting up practices, improving user services, and expanding stock-style businesses.

P.20

We will create high-value pharmacies by helping pharmacistsʼ fully utilize their skills to enhance coordination
between pharmacies and medical institutions, make medical costs more reasonable, improve in-home medicalcare services and self-health-care support.

P.24

Acting in accordance with our management principle, we strive to always be an organization thatwith its employees and at which employees can take pride in their work and feel a sense of
Expanding to Corporate Value grows
purpose.

●Improve value of human resources

We will strength comprehensive abilities to invigorate employees and help themdevelop their skills.

●Strengthen consolidated governance system

We will make decisions quickly and promote compliance management by revisingand strengthening our management system.

●Improve business efficiency

We will improve business efficiency by reforming companywide operations,reorganizing, and using ICT.

SOGO MEDICAL CO.,LTD. All Rights Reserved

P.33

18

Topics１

Medium-term management plan ①Undertaking New Businesses
Medical practice support
HARUHI Respiratory Medical Hospital / SUKAGUCHI Clinic （Opened May 2016, Aichi）▲SUKAGUCHI Clinic▲Hello pharmacy sukaguchi（Operated by Sogo Medical Pharmacy Chubu Co., Ltd.,a comprehensive medical group company）

KIYOSU Respiratory Medical Hospital▲HARUHI Respiratory Medical Hospital

HARUHI Respiratory Medical Hospital

Practice support

SUKAGUCHI Clinic

Management contracting, Introduction of doctor,
Leasing/Installment, Rental, Risk management,
Construction supervision, Facility Leasing, Pharmacy
Key points

Visiting nurse station Yuu
Home nursing care support business Yuu▲64-slice CT scanner

Hello pharmacy sukaguchi●Haruhi Respiratory Medical Hospital (120 beds) is the only medical facility specializing in respiratory diseases in the Tokai region.
●The hospital operates a satellite clinic (SUKAGUCHI Clinic), visiting nurse station, and home nursing care support business.
●Realize a seamless medical structure, from acute care to rehabilitation, which are necessary for surgery and post-surgery patients, to home
medical services for chronic care.
●Formed a partnership with a classroom of the Department of Pathology, School of Medicine, Nagasaki University and developed an Internet
system to facilitate real-time diagnostic discussions. Aiming to achieve more accurate examinations and diagnoses.
SOGO MEDICAL CO.,LTD. All Rights Reserved

19Topics２

Medium-term management plan ②Improving Existing Businesses Medical practice support
Healthcare Malls Opened in FY2016
Miyahara Clinic Mall

（Opened September 2016, Osaka）

Tanashi Clinic Mall

（Opened September 2016, Tokyo）

Hibikino Mall

（Opened July 2016, Fukuoka）

Ogaki-Ekimae Mall

（Opened October 2016, Gifu）

Minaminagareyama Clinic Mall
（Opened May 2016, Chiba ）Shingu Chuo-Ekimae Mall

（ Opened October 2016, Fukuoka）

Kajigaya-Ekimae Clinic Mall
（Opened May 2016, Kanagawa）

SOGO MEDICAL CO.,LTD. All Rights Reserved20Topics３

Medium-term management plan ②Improving Existing Businesses Medical practice support
Creating the ideal healthcare mallTanashi Clinic Mall（Opened September 2016, Tokyo）●The Dermatology Department opened in
April 2017, in addition to a CardiovascularInternal Medicine Department and ENT
Department.
●Located in close proximity to a train
station and city offices to provide easy
access to local residents.
●Also plans to move ahead withcollaborations with neighboring hospitals.

＜Practice support＞

Start-up consulting, Leasing/Installment,
Sales of medical equipment,
Real estate brokerage, Risk management,
Design/Construction, Pharmacy

Kajigaya Ekimae Clinic Mall（Opened May 2016, Kanagawa）

Ogaki-Ekimae Mall（Opened October 2016, Gihu）＜Practice support＞

Start-up consulting,
Leasing/Installment,
Sales of medical equipment,
Real estate brokerage,
Risk management,
Design/Construction,
Pharmacy●Equipped with a urology department
and psychosomatic medicine department.
●Located in the commercial facilities thatwere constructed in tandem with theredevelopment of the area in front of
Ogaki Station. The location is easily
accessible for local residents.
●The population in the area is expected toincrease owing to several factors, mainly
as it is within commuting distance of
Nagoya and as there are plans toconstruct condos in the nearby area.

Further expansion of the healthcare mall business●Expansion, primarily in the Tokyo metropolitan area and Kansai
region, where demand is particularly high, owing to an aging
300
population.

●Set up in front of train station to offer a highlevel of convenience for local residents. Facilities
include pediatrics, ophthalmology, and dentistry
departments, pharmacy, nursery, and adultday-care services.
●Addressing a wide-range of needs for local
residents from seniors to the child-rearing
generation.
SOGO MEDICAL CO.,LTD. All Rights Reserved＜Practice support＞

Real estate brokerage,
Risk management,
Design/Construction,
Pharmacy

Number of healthcare malls
at the end of the fiscal year

200

130
100

36

41

FY2012FY201353

FY201465

FY201575

FY2016FY2017Plan

FY2018Plan

FY2019Plan

FY2020Plan

21Topics４

Medium-term management plan ②Improving Existing Businesses Medical practice support
ＤtoＤ ̶15 years of helping doctors reach their aspirations̶

Strengths of the ＤtoＤsystem and reasons it is chosen●The DtoD (Doctor to Doctor) system, which supports the successionof medical practices, helps coordinate medical care, and assists
doctors to finding new jobs, was launched in October 2001 and iscelebrating its 15th anniversary this year.

●The goal of the DtoD system is to resolve the problems andissues doctors face in the frontlines of the medical field. The
system utilizes doctor information registered on the DtoD
Concierge website and its cross-regional sales network, whichhas 28 locations nationwide, to help doctors make a smoothtransition, between workplaces to open their own practice.
●The system contributes to regional medical care and also
provides lifetime support to doctors with thorough follow-ups.

Number of doctors wishing to transfer/start-up a practice using the DtoD System

56,50540,77862,42969,15948,430Exceeded 69,000 people in total.
33％ of the approximately
210,000（※）employed physicians*Source: Overview ofDoctors/Dentists/Pharmacists in2014 (Ministry of Health, Laborand Welfare)

FY2012FY2013

FY2014FY2015FY2016

Promoting third-party medical practice succession
which contributes to local medical care●Third-party medical practice succession refers doctors wishing tostartup their own practices to private practices (clinics) that do
not have a successor to take over their business. This sustains
and invigorates the local medical care services.
●In the fiscal period ending March 31, 2017, we supported
46 such successions.

SOGO MEDICAL CO.,LTD. All Rights Reserved

22Topics５

Medium-term management plan ②Improving Existing Businesses Medical practice support
Hospital bed reorganization consulting for medical
institutions

Healthcare management seminars

Provide support for the reorganization of local medical
functions in accordance with the MHLWʼs community
healthcare vision.

We will hold seminars for hospital managers andexecutives.

●We receive many inquiries from medical institutions for hospital
bed reorganization consulting. In FY 2016, we consulted on
20 cases.
●We present clients with options for reorganization and solutions
to problems by conducting a comparison with comprehensive
management diagnosis.
●There are 39 healthcare management consultants（※） at Sogo
Medical that offer support to medical institutions.

(held in Tokyo and Osaka in February and Fukuoka in March 2017)●February 12 : Tokyo
What type of healthcare management is necessary to realize thehealthcare community vision※The number of participants was 219.
●February 26 : Osaka
Strategies essential to hospitals for realizing the healthcarecommunity vision※The number of participants was 122.

※Theses healthcare management consultants are all certiﬁed by the Japan Association of
Healthcare Management Consultants＜Healthcare community vision＞
 To promote the separation of hospital beds by function andcooperation between clinics and hospitals, we estimated healthcaredemand for 2025 and determined the number of hospital beds thatwould be necessary for each healthcare function. Hospitals need toreport to prefectures on the current status and future conditions ofhealthcare functions.
 The decision deadline is March 2018

●March 12 : Fukuoka
Taking advantage of the 7th round of revisions to the Medical
Care Act -Direction of proper healthcare being sought by communities※The number of participants was 166.

【Number of hospital beds necessary nationwide for each hospital bed function】（bed)
Results of calculations based

Advanced acute care
hospital beds
Acute care hospital
beds
Rehabilitation hospital
beds
Chronic care hospital
beds
Overall

Number of hospital beds

on hospital bed function

necessary based on thereporting system①

regional healthcare model②①－②

171,404

129,206▲ 42,198

595,983

397,499▲ 198,484

140,333

373,795

233,462352,776

283,023▲ 69,753

1,288,548

1,183,523▲ 105,025

SOGO MEDICAL CO.,LTD. All Rights Reserved

23

Topics６

Medium-term management plan ②Improving Existing Businesses Pharmacies
In December 2016, the Miyonodai Pharmacy Group became a member of our group.
This brings the total number of pharmacies to 674.
●We aim to strengthen our function as a primary pharmacy byfully utilizing the home healthcare technologies and knowhow
cultivated by the Miyonodai Pharmacy Group over many years
in the Sogo Pharmacy Groupʼs home healthcare business.
●We aim to enhance the corporate value of our group by training
pharmacists that will truly contribute to society.
●On January 1, 2017, we ranked No. 3 among dispensing
pharmacy chains, based on the number of pharmacies we
operate.
＜Miyonodai Pharmacy Group＞
 Operates 91 pharmacies in the Kanto area (Tokyo and six
prefectures), primarily Tokyo, and Mie and Osaka
Prefectures.
 The groupʼs philosophy is to contribute to communities byserving as a contact point for the local communityʼshealthcare, nursing, and welfare needs.
 The group was one of the first to offer home healthcare
service by anticipating the needs of an aging society.
 The group has a top-class business platform in the Tokyo
metropolitan area, in which home healthcare demand is
expected to increase further going forward. The group also
has a high level of technology and knowhow necessary foraddressing various needs in home healthcare, including
offering guidance to patients on taking medication at theirhomes, preparing sterilized formations, and night-time visits.
※In the Tokyo metropolitan area alone, the population of people over 75 years
and older is expected to increase by 1.75 million by 2025.

SOGO MEDICAL CO.,LTD. All Rights Reserved

24Revision and effect of Dispensing Fees in FY2016
Review of basic dispensing fee （revision of evaluation for pharmacies located in front of large hospitals）【Post revision】
Specialexceptions (*1)

Basic dispensing fee

50/100reduction (*2)(when factored in)(when factored in)

41 points―

21 points

25 points

Basic feeset at 1

13 points

20 points

Basic feeset at 1

10 points

Basic dispensing fee ４（Low price settlement rate for basic dispensing fee 1）

31 points―

16 points

Basic dispensing fee ５（Low price settlement rate for basic dispensing fee 2）

19 points

Basic feeset at 4

10 points

Special basic dispensing fee（Newly set fee）

15 points

Basic feeset at 4

8 points

Basic dispensing fee 1
Basic dispensing fee 2（Requirement revisions）●More than 4,000 prescriptions filled per month and a concentration ratio of 70%-plus●More than 2,000 prescriptions filled per month and a concentration ratio of 90%-plus●More than 4,000 prescriptions filled per month from a designated medical institution(Concentration ratio does not factor in.)

Basic dispensing fee ３（Newly set fee）

For health insurance pharmacies belonging to a pharmacy group that fills more than 40,000
prescriptions per month overall●Prescription concentration rate of 95%-plus●Leases real estate from a designated medical institution（Low price settlement rate for basic dispensing fee 3）※１：In the event all criteria is met●50% or more of pharmacists working at the pharmacy conform to facility standards for primary care pharmacist guidance fees
●Is a primary care pharmacist with considerable experience in guidance fees and comprehensive management fees
※2： Pharmacies that do not implement a fixed number of operations per year that are related to the basic functions of a primary care pharmacy（excluding pharmacies that fill 600 or fewer prescriptions per month）*Source: Excerpts from Ministry of Health, Labour and Welfare material

SOGO MEDICAL CO.,LTD. All Rights Reserved

25

Revision and effect of Dispensing Fees in FY2016
Review premium for standard dispensing system

Patient-first vision for pharmacies【Current fees】

Becoming a primary-care pharmacy, rather than just thepharmacy in front of the hospital, and evolving into a part ofthe community.

 Scheme to claim a premium for standard dispensing １
 Scheme to claim a premium for standard dispensing ２【Post revision】

 Scheme to claim a premium for standard dispensing

12 points
36 points
32 points[Calculation criteria]●Calculation only for health insurance pharmacies using the formula for the basic dispensingfee 1 (41 points).

[Facility standards］●Storing more than 1,200 types of pharmaceuticals.
●Open for business for more than 45 hours per week. Operates more than 8 hours a day on
weekdays, and open Saturdays and Sundays for a specified amount of time.
●Either independently or in alliance with a neighboring pharmacy, operates dispensing 24
hours a day and with a system in place for work-at-home pharmacists jobs.
●Possesses a narcotics license.
●Has a work-at-home track record of one year.
●The supervising pharmacist must have more than 5 years experience working at a pharmacy.
Prior to becoming a supervising pharmacist, the pharmacist must have worked at the same
pharmacy for more than 1 year. And the pharmacist must work at the pharmacy for morethan 32 hours.
●Submitted regulatory filing for primary care pharmacist guidance fees and comprehensive
management fees.
●The pharmacy must have a prescription concentration rate of over 90% and the ratio ofgenerics dispensed must be more than 30%.

Requirements change for the scheme for claiming
premiums for the dispensing of generics by pharmacies【Current fees】

 Scheme for claiming premiums for the dispensing of generics 1（Ratio of dispensing volume is 55% or higher）18 points
 Scheme for claiming premiums for the dispensing of generics 2（Ratio of dispensing volume is 65% or higher）22 points【Post revision】

 Scheme for claiming premiums for the dispensing of generics 1（Ratio of dispensing volume is 65% or higher）18 points
 Scheme for claiming premiums for the dispensing of generics 2（Ratio of dispensing volume is 75% or higher）22 points
SOGO MEDICAL CO.,LTD. All Rights Reserved*Source: Excerpts from Ministry of Health, Labour and Welfare material

26

Topics７

Medium-term management plan ②Improving Existing Businesses Pharmacies
Duties as primary care pharmacist/pharmacy●Carry out various duties as a general health station and as theprimary care pharmacist/pharmacy that is selected by patients
・Home visits
・Trace report
・Bags for disposal of leftover drugs
・Medicine calendar
・Supporter of patients with dementia
・Training・Special business card as primary care pharmacist
・Also, advertising tools as primary care pharmacist

Launching field training program for primary-care pharmacists●This program is a more hands-on field training program for ourpharmacists nationwide. We plan to start implementing the
program for pharmacists at Sogo Pharmacies and then expand it
to include group pharmacies.
●Main details(1) Support self-medicationa. Selection and introduction of safe and effective OTC drugs dependingon the patientʼs needs
b. Advice on preventing and improving an illness, including life-stylediseasesc. Advice on medical exams depending on a patientʼs symptoms(2) Improvement of communication skills

Videotape a mock patient interview and have pharmacists objectively
review their dialogue with the patient▲Home visits▲Trace report

For information such as thevoice of patients, including
information on drug
administration and doses,
create trace reports toprovide feedback to doctors.

▲Special business card
as primary pharmacist▲Orange wristband
identifying staff as
supporters of Dementia
patients.

SOGO MEDICAL CO.,LTD. All Rights Reserved▲Medicine calendar▲In-pharmacy posters▲Training using mock patients27

Topics８

Medium-term management plan ②Improving Existing Businesses Pharmacies
Increase the number of pharmacists specializing
in cancer and diabetes treatment

Accredited Pharmacist of Ambulatory Cancer
Chemotherapy●Promote the growth of pharmacists specializing in cancer anddiabetes treatment (internal certification) to deal with patientsthat have advanced pharmacological management needs.

●Accredited Sogo Medical pharmacist for out-patient cancer
therapy gave a lecture at the 24th Annual Meeting of The
Japanese Breast Cancer Society and Annual Meeting of JapaneseSociety of Pharmaceutical Oncology in 2017.

●From 2011, we placed pharmacists specializing in cancer anddiabetes treatment at Sogo Pharmacy Tenjin Chuo to provide
optimal care to individual patients.
●We aim to expand this on a company-wide basis throughsystematic training, including knowledge of diseases, patient
psychology, and care procedures.

Pharmacists specializing in home care getting
fully underway●Sogo Medical has four accredited pharmacists for out-patient
cancer therapy.
●A monthly meeting has been held at the Sogo Pharmacy Tenjin
Chuo shop, since 2013.
●These meetings provide cancer patients and their family
members with a place for frankly expressing their various
thoughts and worries while having tea.

●Pharmacists specializing in home care (internal certification) havean advanced knowledge of pharmacology and pathology, and havea high level of expertise in providing care in cooperation withmedical professionals in other fields.
●Provide advice based on the individual patientʼs lifestyle.
●Sogo Medical Group pharmacists visit
patients in their homes or in seniorliving facilities to deliver prescriptions.
We are actively embarking on a
pharmacy home visit service to assist
patients in managing and taking
medications.

▲Sterilized pharmacy using a sterile
workbench (Sogo Pharmacy home
visit center in Aoto, Tokyo)

SOGO MEDICAL CO.,LTD. All Rights Reserved28Topics９

Medium-term management plan ②Improving Existing Businesses Pharmacies
Healthcare support pharmacy initiatives●Healthcare support pharmacies

 These pharmacies are equipped with the basic functions of a primary pharmacist/pharmacy. They actively promote thehealth of residents in the local community.
 These pharmacies have met certain standards, including those for advice on pharmaceuticals and health consultations, andmulti-occupational alliances. These pharmacies must meet criteria and file with regulatory authorities to become certified asa healthcare support pharmacy.

●Sogo Medicalʼs initiatives

 On October 18, the Sogo Pharmacy Hagi (Hagi City, Yamaguchi Prefecture) became our first healthcare support pharmacy.
 Enacted on April 1, 2016. Filings began on October 1, 2016.
 In April, 2017, we had a total of 37 healthcare support pharmacies. 267 filings nationwide until April, 2017.
 We plan to actively promote the healthcare support pharmacy initiative going forward as it adheres to the direction of ourgroupʼs plans to develop pharmacies that work closely with the surrounding community to be a “healthcare station for all.”Handling of pharmaceuticals that require
guidance on dosage of intake, and othermatters
On-site training to support for self-medication
The program is open to around 1,500 pharmacists
throughout Japan.
SOGO MEDICAL CO.,LTD. All Rights Reserved

Pharmacy facilities

Each pharmacy has a consultation space andpharmacy windows that are partitioned off forprivacy.

▲Sogo Pharmacy Hagi

Healthcare consultation meetings andsupportVarious events are held related to healthcare (early
detection of dementia, diabetes prevention,
consultation meetings on nutrition, etc.)29Topics１０

Medium-term management plan ②Improving Existing Businesses Pharmacies
Increasing the implementation of health events

Early detection of dementia and proper handling●Packaging the content of events so that high-quality health
events can be efficiently carried out at all pharmacies. We aim topour energies into promoting health and wellbeing among local
residents by further enhancing the health-support function of ourpharmacies.

【Example】 Sogo Pharmacy Machida Yakushidai●A hands-on events and consultation
meeting was held on cognitive functions
and simple tests for detecting dementia.

【Content of health event packages】
Held at pharmacies, free of charge. Lend pharmacies a set that
includes related tools, such as operational guidelines and devices
that gauge a personʼs health.
1. Lectures by pharmacists and nutritionists
Topics include preventing dementia and diabetes
2Health experience event
Take simple test for forgetfulness, thrilling art experience(activate brain cells)
3. Health check
Measure blood pressure, blood vessel age, and body composition(weight, body fat (BDI), muscle, etc.)
Pharmacists help customers take measurements and offer advice
based on the results In October 2016, we conducted a simple test
for the early detection of mild cognitive
impairments. Local residents participated in
the test.
 The purpose of this test is to encourage
people to make improvements to their daily
lifestyle habits while in the early stages ofmild cognitive impairments. Participants arealso urged to share the results of the testwith affiliated medical institutions so thatthey can receive support further out.

▲Hands-on event to promote
the simple testing of cognitive
functions●Participation in the Dementia Café The Yakushidai Medical Terrace hosts the Dementia Café once a month.
This Pharmacy is a tenant in the Yakushidai Medical Terrace.
 The event is jointly held by the facilities in this medical mall.
(internal medicine and orthopedic clinic, pharmacy, day service, etc.）
 The café aims to contribute to the prevention of dementia among local
residents through various events, including lectures by doctors anddementia patients.

Dementia supporters●The dementia supporters offer warm support to dementia patientsand their families. These supporters possess knowledge and aproper understanding of dementia.
●We are actively offering this training to new employees and othersin the Sogo Medical Group.
●Around 85% of the staff that works at our pharmacies is a certified
dementia supporter.

SOGO MEDICAL CO.,LTD. All Rights Reserved30Topics１１

Medium-term management plan ②Improving Existing Businesses Pharmacies
Manage leftover drugs and reduce medical
costs by roughly ¥5 million per monthPartner in the governmentʼs hepatitis awarenessproject●In May 2016, we began handing out our own original “leftover
drug bag” to patients for free at all Sogo Pharmacies nationwide.
This step is to strengthen steps to resolve the issue of leftover
drugs.
●The objective of the leftover drug bag is to reduce the amount ofdrugs leftover and adjust drug therapies. Patients place the drugs
they forgot to take or overlapping prescriptions into the bag andbring them to their primary pharmacist.

●On December 1, 2016, we registered as a partner for thegovernmentʼs Project which helps to raise awareness of hepatitis.
The project is being conducted by the MHLW as a part of its
program to raise public awareness to fight hepatitis.
●We plan to hold awareness-raising activities directed at patientsand employees. This will include providing information on hepatitis
and the importance of testing for the hepatitis virus.

【Results from verification of benefits of leftover drug management】
１． Period: About 7 months (May 10, to November 30, 2016)
２．Participating pharmacies: 442 directly-managed Sogo Pharmacies
３． Flow of steps and benefits
i. Adjust (reduce) the amount of drugs that are leftover→ 19,765 times
ii. Give the patient a leftover drug bag for find out what drugs gounused
→ 4,840 timesiii. The bag is brought back to the pharmacy at a later date andadjustments are made based on the amount of drugs left over
→ 913 times＜Program to Raise Public Awareness to Fight Hepatitis＞
 This program was launched in response to the basic guidelines
developed in 2011 on fighting the spread of hepatitis. The program ispart of a campaign for the MHLWʼs subsidy program for the treatmentof hepatitis.
 From 2013, awareness-raising activities have been actively carried out
to provide easy-to-understand information on hepatitis and theimportance of getting tested for the hepatitis virus. The goal is to givethe public a proper understanding of the disease and promote early
detection and early treatment.

The total amount of leftover drugs
during the 7 months (i + iii)
→ About ¥35 million(roughly ¥5 million per month)
SOGO MEDICAL CO.,LTD. All Rights Reserved▲Leftover drug bag

31

Topics１２

Medium-term management plan ②Improving Existing Businesses Pharmacies
Private-brand products ”SOGO SMILE”

Virtual shop opened●Products are jointly developed by pharmacists
and senior nutritionists.

●From the middle of September, we opened a virtual shop at Sogo
Pharmacy Tenjin Chuo, where customers can purchase SOGO
SMILE products, a medical brand of products, among other items.
●The virtual shop can be accessed by a smartphone app ExOrder.*●The user uses their smartphone to read a productʼs data matrix
code on a poster or panel and then simply presses the “buy”
button. Purchases are delivered to the customerʼs home as quickly
as the next day.
●The virtual shop carries around 20 items, mainly the SOGO SMILE
brand of products. We are currently considering expanding thenumber of products offered and rolling out virtual shops at otherpharmacies.
●From late March 2017, we began distributing a leaflet version.
Given home nursing care needs, we plan to further expand our
product lineup by adding nursing care goods (including diapers).
* AliveCast Co., Ltd. developed the smartphone application.

▲Posted with the product data matrix code

SOGO MEDICAL CO.,LTD. All Rights Reserved

32Topics１３

Medium-term management plan ③Expanding to corporate value Improve value of human resources
Increasing the number of female employees
in leadership positions
Training for future female managers●The goals of this training are for female employees to learn
mental preparation and the skills required of managerial staff,
and to consider a clear life and career plan.
●This training develops human resources who are expected toexercise real leadership as managerial staff members andcandidates for those posts in the future.

Promoting the hiring of employees withdisabilities●Establishing a section devoted to the employment of challenged
people, and concentrating on this section various kinds of work
supporting other sections around the company, including the
preparation of business cards, seals, and other office equipment.
●Aiming to raise our company to an organization that enables
challenged employees to be independent, feel more confident andproud of themselves, and work as valuable assets to the company.

Seminar on promoting the roles of female employees●We share ideas on implementing OJT in the workplace topromote the roles of women in the company.

▲Seminar on promoting the roles of female employees

SOGO MEDICAL CO.,LTD. All Rights Reserved▲Preparing business cards▲Enclosing and wrapping PB product samples

33

Topics１４

Medium-term management plan ③Expanding to corporate value
HOKENDOHJINSHA Inc.
HOKENDOHJINSHA became a part of the Sogo Medical Group in
March 2015.
Corporate profile (as of April 1, 2017)
Company name

HOKENDOHJINSHA Inc.

Representative

Hirokazu Furukawa, Representative Director and President

Founding
Address (head office)LocationsNo. of Employees
CapitalJune 1, 1946
4-4 Ichibancho, Chiyoda-ku, Tokyo
Tokyo, Osaka, Nagoya, Fukuoka
159¥59 million

Main shareholders

Sogo Medical Co., Ltd; Mitsui & Co., Ltd.

Business description

Health and mental care consultation services, provision ofhealthcare information over the Internet and via portabledevices, EAP (employee assistance program) business, andpublication of medical and healthcare related materials

Appreciation event to commemorate the 70th anniversary of Sogo
Medicalʼs founding●On October 21, 2016, we held an appreciation event. Over 200 people
attended, including members of health insurance organizations andmedical practitioners. Dr. Fukui, president of St. Lukeʼs International
Hospital, gave a lecture.
●Returned to founding spirit
and aiming to become a company
that fully addresses the needs ofa new generation.
Appreciation event to ▶
commemorate the70th anniversary.

SOGO MEDICAL CO.,LTD. All Rights Reserved

We plan to offer total health management* support by reinforcing
the EAP (employee assistance program) business given thatstress checks are now mandatory.
● Hokendohjinsha, Inc and Humanage, Inc. (Head office:Chiyoda-ku, Tokyo; President: Ryozo Saito) jointly supplied
TEAMS, an employee assistance program (EAP) for companies
that currently boasts usership of 1,561 corporations and morethan 9.47 million people (as of September 2016).
Offering Co-Labo stress-check package to support group companies●From January 16, 2017, Hokendohjinsha, and Humanage,
began providing the Co-Labo stress-check package to support
group companies and facilitate the effective introduction andoperation by group companies.
●The Co-Labo stress-check package to support group companies
offers cost benefits. But its biggest feature is the ability toflexibly accommodate a wide range of needs, including astandard implementation method for an entire group, and theseparation of announcements to employees at each groupcompany, although the head office is in charge (or for exam
period, high stress standards, etc.).
【Level of service satisfaction (survey by Hokendohjinsha Inc.)】Higher level of satisfaction at companies that use Co-Labo, as opposedto those companies that use another companyʼs products
0%

Another comnayʼｓ products

100%

32.1%

64.1%

Use Co-Labo

Very satisfied・satisfied

neither satisfied nor dissatisfied

somewhat dissatisfied
・very dissatisfied＊Health management is a registered trademark of the Workshop for the Management of Health on
Company and Employee

34Topics１５

Medium-term management plan ③Expanding to corporate value
Student seminars and internships【Seminar for students look to work in pharmaceutical sales】●Various seminars
 Target: Open to all students, regardless of year in school, or
whether the student is a liberal arts or science major
 Content: Sales experience seminar, pharmaceutical industry
seminar, self-awareness seminar, and consulting seminar Locations: Tokyo, Osaka, and Fukuoka (total of 26 times)【For students planning to become pharmacists]】
 Target t: Pharmacy students in the 3rd-5th year Content: Training and workplace experience Locations: Tokyo, Osaka, Nagoya, Okayama, Hiroshima, andFukuoka*Around 200 participants in 2016
● Seminar to prepare for national exam
 Target: Pharmacy students that have not made it to their 5thyear of studies
 Content: In addition to the seminar to prep for the national
exam, other events were held, including a round-tablediscussion with senior employees
 Locations: Tokyo, Osaka, and Fukuoka (total 15 times)*Roughly 500 participants in 2016

SOGO MEDICAL CO.,LTD. All Rights Reserved▲Seminar for students look to work inpharmaceutical sales▲Round-table discussion with senior employees

35Topics１６

Medium-term management plan ③Expanding to corporate value
Articles run in the newspaper, The Nikkei●During December 8th -10th, 2016, newspaper, The Nikkei, covered our company in a three part series titled “Interpreting corporate strength.”●”Development of healthcare mall in Osaka” on March 31, 2017.
●We uploaded the articles to our website.
http://www.sogo-medical.co.jp/attention/index_5.php (Articles on our company)▲December 8, 2016 newspaper,
The Nikkei, morning edition,
Kyushu Economies▲December 9, 2016 newspaper,
The Nikkei, morning edition,
Kyushu Economies▲December 10, 2016 newspaper,
The Nikkei, morning edition,
Kyushu Economies▲March 31, 2017 newspaper,
The Nikkei, morning edition,
Kyushu Economies※We received permission to upload these articles from Nikkei Inc..

SOGO MEDICAL CO.,LTD. All Rights Reserved36

Ⅳ. Corporate Profile ／ Business Model／ Management Principles

37Corporate Profile ／ Business model
Corporate Profile（As of April 27, 2017）
Core BusinessComprehensive support for
medical practice management

Head Office

Fukuoka Tenjin Center Bldg. 16F, 2-14-8
Tenjin,Chuo-ku, Fukuoka

Representative

The company will provide comprehensive medical
management support based on consulting services.

Kenji Sakamoto,
Representative Director,
President and Chief Executive Officer
Shinya Mikita,
Representative Director,
Executive Vice President

FoundedJune 12,1978

Capital¥ 3,513 million

Net Sales¥ 122,216 million (As of March 31, 2017）

Bases

Business model

709(Offices 3,Branches 23,Sales Offices 4,Satellite Offices 1, Dispensing pharmacies 676,
in-hospital stores 2）

Employees

5,681（4,304 full-time workers, 1,377 part-time workers)

ListedFirst Section, Tokyo Stock Exchange (Code:4775)(As of April 1, 2017)

SOGO MEDICAL CO.,LTD. All Rights Reserved38

ＤtoＤ System
Introducing optimal partners from among registered doctors and medical institutions

Total support service: career changes, succession, and partnerships
Employed physicians: Over 8,000 new doctors enter the market every year. Meanwhile, positions at most hospitals are limited.
Private practices: Nearly one-fifth of all private practice physicians at clinics and employed physicians are over the age of 70.
5,000 clinics a year go out of business
Hospitals: More diverse work arrangements are being offered to doctors making it difficult for smaller hospitals to secure doctors.
2.
succession

1. careerchanges

SOGO MEDICAL CO.,LTD. All Rights Reserved

3.
Partnerships

1.
careerchanges Introduce jobs that suit the career and life plansof doctors and support career changes
 Assist in getting diverse work arrangements for
doctors and stabilizing the supply of doctors to
hospitals

2.
succession

 Introduce doctors looking to open a private
practice to private practices that do not have a
successor and assist in the succession of theprivate practice Contribute to continued provision and improved
efficiency of regional medicine

3.
Partnerships

 Support medical partnerships between local clinics
and hospitals
 Divide up medical functions, adjust the number ofout-patients taking advantage of partnerships,
and contribute to an improvement in referral rates
and reverse referral rates

39

Management principles / Concept

Good Medical Practicethrough Good Management
Our business concept is to support good medical practice by resolving themanagement issues faced by medical institutions and helping them realize
sound medical business management by responding to their various needs.
We also seek to practice good management ourselves so we can continue toprovide better services to our customers.

SOGO MEDICAL CO.,LTD. All Rights Reserved40