Consolidated Financial Statements for the Third Quarter of
the Fiscal Year Ending March 31, 2022
[Japanese GAAP]
February 3, 2022
Company name: VITAL KSK HOLDINGS, INC.
Stock exchange listing: Tokyo Stock Exchange
Code number: 3151
URL: https://www.vitalksk.co.jp/
Representative: Mr. Taisuke Murai, President & CEO
Contact: Mr. Kiharu Takahashi, Executive Officer and General Manager of Accounting & FinancePhone: +81-3-3275-3303
Scheduled date of filing quarterly report: February 10, 2022
Scheduled date of commencing dividend payments: —Preparation of supplementary explanatory materials: None
Quarterly financial results meeting: None
(Amounts of less than one million yen are rounded down.)
1. Consolidated Results for the Third Quarter of the Fiscal Year Ending March 31, 2022
(April 1, 2021 – December 31, 2021)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Operating profit
Profit attributable to
Net sales
Ordinary profit(loss)
owners of parent
Nine months ended
Million yen%
Million yen%
Million yen%
Million yen%
December 31, 2021
439,329
7.5
2,086
4,220
665.7
2,448
629.2
December 31, 2020
408,829(5.5)(1,682)551(89.8)
335(92.8)(Note) Comprehensive income: Nine months ended December 31, 2021: ¥(554) million [-%]
Nine months ended December 31, 2020: ¥5,311 million [(24.8)%]
Basic earnings per
Diluted earnings per
share
share
Nine months ended
Yen
Yen
December 31, 2021
44.84
December 31, 2020
6.10
(2) Consolidated Financial Position
Total assets

Net assets

Million yen

Equity ratio

Million yen%

346,897
101,341
As of December 31, 2021
311,401
103,916
As of March 31, 2021
(Reference) Equity: As of December 31, 2021: ¥100,282 million
As of March 31, 2021: ¥102,943 million

28.9
33.1

2. Cash Dividends
1stquarter-end
Yen

Annual dividends
2nd quarter3rd quarterYear-end
end
end
Yen

Yen

Year ended
12.00
March 31, 2021
Year ending
12.00
March 31, 2022
Year ending
March 31, 2022 (Forecast)(Note) Revision to the forecast for dividends announced most recently: None

Total

Yen

Yen

0.00

12.00

12.00

24.00

3. Forecast of Consolidated Results for the Fiscal Year Ending March 31, 2022
(April 1, 2021 - March 31, 2022)(% indicates changes from the previous corresponding period.)
Net sales

Operating profit

Ordinary profit

Profitattributable toowners of parent

Basic earnings
per share%

Yen

Full year
542,200
1.0
1,600
4,200 505.7
4,000 241.4(Note) Revision to forecast of consolidated results announced most recently: None

73.64

Million yen% Million yen% Million yen% Million yen* Notes:(1) Changes in significant subsidiaries during the period under review: None
(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: Yes* For details, please see “(3) Notes to Quarterly Consolidated Financial Statements (Accounting policies adopted
specially for the preparation of quarterly consolidated financial statements)” on page 8 of the attached materials.
(3) Changes in accounting policies, changes in accounting estimates and retrospective restatement
1) Changes in accounting policies due to the revision of accounting standards: Yes
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(4) Total number of outstanding shares (common shares)
1) Total number of outstanding shares at the end of the period (including treasury stocks):
December 31, 2021: 61,224,796 shares
March 31, 2021: 61,224,796 shares2) Total number of treasury stocks at the end of the period:
December 31, 2021: 7,742,171 shares
March 31, 2021: 5,990,796 shares
3) Average number of shares during the period:
Nine months ended December 31, 2021: 54,604,495 shares
Nine months ended December 31, 2020: 55,066,375 shares* These quarterly financial results are outside the scope of quarterly review by certified public accountants or audit
corporations.
* Explanation of the proper use of performance forecast and other notes
The earnings forecast and other forward-looking statements herein are based on the information currently available
and certain assumptions deemed reasonable by the Company, and thus actual results may differ significantly fromthese forecasts due to a wide range of factors.

Table of Contents
1. Qualitative Information on Quarterly Financial Results .................................................................................. 2
Explanation of Operating Results ................................................................................................................. 2
2. Quarterly Consolidated Financial Statements and Primary Notes ................................................................... 4(1) Quarterly Consolidated Balance Sheets ....................................................................................................... 4(2) Quarterly Consolidated Statements of Income and Comprehensive Income ............................................... 6(3) Notes to Quarterly Consolidated Financial Statements ................................................................................ 8(Notes on going concern assumption) ..................................................................................................... 8(Notes in the case of significant changes in amount of shareholders’ equity) ......................................... 8(Accounting policies adopted specially for the preparation of quarterly consolidated financial
statements).............................................................................................................................................. 8(Changes in accounting policies) .................................................................................................................. 8(Segment information) ............................................................................................................................ 8

11. Qualitative Information on Quarterly Financial Results
Explanation of Operating Results
The Japanese economy during the nine months ended December 31, 2021 remained unpredictable with theongoing COVID-19 pandemic, while vaccination rates increased.
In the pharmaceutical wholesale industry, our Group’s primary business segment, Japan’s medical expense
curbing policy led to drug price revision every year since 2018, and the scope of off-year drug price revisions in
April 2021 was far beyond the original expectation. It was the negative revision of medical costs(approximately ¥430 billion down) based on the budget for fiscal year 2021.
Under these circumstances, the Group reached the final year of its fourth medium-term management planfor the three-year period from the year ended March 31, 2020 to the year ending March 31, 2022. In the fourth
medium-term management plan, the Company continues to work on its long-term vision toward 2025 of“Becoming an indispensable presence in regional and community healthcare by strategically providing
products and services to support medicine and nursing.” Furthermore, under this long-term vision, as its
medium-term vision during the fourth medium-term management plan, the Company defined the vision of “To
Become the Corporate Group of Choice” with practical tasks to “1. Construct a prescription pharmaceuticalwholesale business system to create profits continuously even in the low-growth environment,” “2. Increase
earnings through growth and expansion of emerging business (Note),” and “3. Strengthen the Groupmanagement system.” Additionally, to realize this medium-term vision, the Company is working toward thefour basic principles of “Demonstrating the comprehensive strength of the Group by implementing effective
and efficient Group management,” “Expanding and establishing provision functions and focus on growing
domains,” “Coordinating regional healthcare and providing support and solutions,” and “Developing new
earnings strategies and businesses that use our strengths and resources.”
For the nine months ended December 31, 2021, net sales were ¥439,329 million (107.5% of that of thesame period of the previous year), operating profit was ¥2,086 million (operating loss of ¥1,682 million in thesame period of the previous year), ordinary profit was ¥4,220 million (765.7% of that of the same period of theprevious year), and profit attributable to owners of parent was ¥2,448 million (729.2% of that of the same
period of the previous year).
While the application of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020) and other standards reduced net sales by ¥1,097 million, it did not affect operating profit,
ordinary profit, and profit attributable to owners of parent.
(Note) Emerging business refers to businesses other than the prescription pharmaceutical wholesale business
Performance results by business segment are as follows.
1) Pharmaceutical Wholesale BusinessIn the pharmaceutical wholesale business, in the previous year, demand for pharmaceuticals declined
significantly due to restrictions on medical examinations and the postponement of surgeries and other medical
treatments stemming from the spread of COVID-19. However, the demand has been recovering faster than
anticipated for the nine months ended December 31, 2021 even though it did not reach pre-COVID levels.
COVID-19 related product sales and rentals also performed well.
In the previous year, we couldn’t have enough time for price negotiation with customers due to the impact
of COVID-19 pandemic as well as the intensified competition in the market. As a result, we couldn’t promote
the negotiation for unit price-based contract which is one of the approaches for improvement of commercial
transaction practices of ethical drugs which we had worked on for a long time. For the nine months ended
December 31, 2021, we are making our utmost efforts towards promotion of the negotiation for unit pricebased contract, and the deal with optimized price in consideration of the value of pharmaceutical products, inline with the purpose of Guidelines for the Improvement of Commercial Transaction Practices of Ethical Drugs,2

to maintain the structure to provide a stable supply of pharmaceutical products. In addition, we have focused on
the cost reduction by reviewing operational processes. Meanwhile, to fulfill our social mission of helping to put
COVID-19 to an end, we have also focused on COVID-19 vaccine-related work commissioned by the national
and local governments, which involves vaccine delivery, operation of primary vaccination clinics with deep
freezers, and repackaging in smaller units.
As a result, net sales were ¥414,895 million (107.4% of that of the same period of the previous year), andsegment profit (operating profit) was ¥1,688 million (segment loss of ¥1,878 million in the same period of theprevious year).
The application of the Accounting Standard for Revenue Recognition and other standards reduced net
sales by ¥1,097 million, while it did not affect the segment profit.

2) Pharmacy BusinessIn the pharmacy business, net sales were ¥13,791 million (110.4% of that of the same period of theprevious year) due to the increase of one consolidated company in the dispensing pharmacy business and thegrowth in the number of prescriptions received, and segment profit (operating profit) was ¥162 million(segment loss of ¥37 million in the same period of the previous year).
The application of the Accounting Standard for Revenue Recognition and other standards did not affect
net sales and segment profit.
3) Veterinary Drug Wholesale BusinessIn the veterinary drug wholesale business, net sales were ¥7,850 million (104.9% of that of the same
period of the previous year), and segment profit (operating profit) was ¥318 million (97.3% of that of the same
period of the previous year), due to the increase in distribution outsourcing costs.
The application of the Accounting Standard for Revenue Recognition and other standards increased net
sales by ¥0 million, while it did not affect the segment profit.
4) Other Businesses
In other businesses, the nursing care business improved its earnings, whereas the sports facility
management business performed insufficiently. As a result, net sales were ¥2,791 million (106.2% of that of thesame period of the previous year), and segment loss (operating loss) was ¥119 million (segment loss of ¥127
million in the same period of the previous year).
The application of the Accounting Standard for Revenue Recognition and other standards did not affect
net sales and segment profit.

3

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly Consolidated Balance Sheets(Million yen)
As of March 31, 2021
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Inventories
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

4

As of December 31, 2021

29,784
114,599
29,31815,367
1,632(67)
190,634

39,310134,747
33,77916,401
3,525(69)
227,694

19,10820,6704,907
44,686

19,086
20,952
6,327
46,366

3,111
1,480
4,591

2,960
1,933
4,894

55,186
16,876(574)
71,488120,766
311,401

51,541
16,973(572)
67,942
119,202346,897(Million yen)
As of March 31, 2021
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Other provisions
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Other provisions
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets

5

As of December 31, 2021

166,973
1,200
5,370
224
1,431
146
3,079
178,426

205,417
1,130
970
1,404
545
－
8,465
217,932

8,730
229
5,915
14,18429,058207,485

8,002
226
5,714
13,67927,623
245,555

5,000
12,81060,285(5,025)73,0705,000
12,81062,076(6,386)73,50027,652

24,852

2,220

1,929

29,873

26,782972
103,916
311,401

1,059
101,341
346,897

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income
Nine Months Ended December 31, 2020 and 2021
(Million yen)

Net sales
Cost of sales
Gross profit
Reversal of provision for sales returns
Provision for sales returns
Gross profit - net
Selling, general and administrative expenses
Operating profit (loss)
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using
equity method
Administrative service fee income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rental expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Impairment losses
Loss on valuation of shares of subsidiaries andassociates
Other
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

For the nine months ended
December 31, 2020
408,829
380,218
28,610174
16428,62130,303(1,682)For the nine months ended
December 31, 2021
439,329
407,034
32,295－－32,29530,208
2,086

41
613

37
578

62

49

1,114
604
2,436

1,180
453
2,298

59
65
78
202
551

74
64
25
164
4,220

34
468
14
517

12
－
5
17

16
16

19
47

69

11

112
214
854
427
426
91
335

13
92
4,145
1,608
2,536
88
2,448

6

Quarterly Consolidated Statements of Comprehensive Income
Nine Months Ended December 31, 2020 and 2021
(Million yen)

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Remeasurements of defined benefit plans, net oftax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

For the nine months ended
December 31, 2020
426

For the nine months ended
December 31, 2021
2,536

4,965

(2,629)

(220)

(291)

140

(169)

4,884
5,311

(3,091)
(554)

5,220

(642)

91

88

7

(3) Notes to Quarterly Consolidated Financial Statements(Notes on going concern assumption)
For the nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021)
Not applicable.
(Notes in the case of significant changes in amount of shareholders’ equity)
For the nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021)
Not applicable.
(Accounting policies adopted specially for the preparation of quarterly consolidated financial statements)
Calculation of tax expenses
Tax expenses are calculated by the method in which the effective tax rate on profit before income taxes forthe current consolidated fiscal year after application of tax effect accounting is reasonably estimated, and profit
before income taxes was multiplied by the estimated effective tax rate.
(Changes in accounting policies)
The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020) and other standards from the beginning of the first quarter. The Company now recognizes
revenue as the amount expected to be received in exchange for promised goods or services when control of said
goods or services is transferred to the customer.
Previously, the Company had recorded provision for sales returns based on the amount equivalent togross profit regarding sales with a right of return. The Company has since changed the recognition method forgoods or services that are expected to be returned in accordance with the rule regarding variable consideration, so
as not to recognize revenue at the time of sales but recognize refund liabilities at the amount it received or is
expected to receive for the said goods or services.
For the application of the revenue recognition accounting standard, the Company has followed thetransitional treatment prescribed in the Article 84 proviso of the standard. Accordingly, the cumulative effect ofretroactively applying the new accounting policy prior to the beginning of the first quarter has been added to or
subtracted from retained earnings at the beginning of the quarter, which nevertheless had no impact on the balanceat the beginning of the quarter.
As a result of the above applications, net sales for the nine months ended December 31, 2021 declined¥1,097 million, cost of sales ¥1,074 million, reversal of provision for sales returns ¥0 million, and provision forsales returns ¥23 million, while gross profit, operating profit, ordinary profit, and profit before income taxes were
not affected.
The Company has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July4, 2019) and other standards from the beginning of the first quarter. In accordance with the transitional treatments
prescribed in Article 19 of the Accounting Standard for Fair Value Measurement and Article 44-2 of the
Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the Company plans toapply the new accounting policies stipulated by the Accounting Standard for Fair Value Measurement and otherstandards through the future. The decision does not affect the quarterly consolidated financial statements.
(Segment information)
1. Overview of reportable segments
The Group’s reportable segments are components of the Group about which separate financial information isavailable. These segments are subject to periodic examinations to enable the company’s Board of Directors todecide how to allocate resources and assess performance.
The Group’s segment is categorized based on the business of its operating company, and thus its main segments,
8the “Pharmaceutical Wholesale Business,” the “Pharmacy Business,” and the “Veterinary Drug Wholesale
Business” comprise the Group’s reportable segments.
The “Pharmaceutical Wholesale Business” is engaged in sales of drugs, diagnostic products, medical devices,materials, etc. to medical institutions, such as hospitals, clinics, and pharmacies.
The “Pharmacy Business” is engaged in sales of drugs, medical devices and equipment, and hygiene materials,
etc. to general consumers.
The “Veterinary Drug Wholesale Business” is engaged in sales of veterinary drugs, feeds, etc. to farms, ranches,
veterinary hospitals, clinics, etc.
(Notes relating to changes in reportable segments, etc.)
Starting in the fiscal year ended March 31, 2021, the “Veterinary Drug Wholesale Business,” which waspreviously included in the “Others,” has been classified as a reportable segment given its increased quantitative
importance.
Further, from the fiscal year ending March 31, 2022, the “Pharmacy Business,” which was previously includedin the “Others,” has been classified as a reportable segment as a result of review of the classification method ofbusiness segments.
The segment information for the previous consolidated fiscal year has been prepared based on the classification
after the change.
As described in the changes in accounting policies, the Company has applied the Accounting Standard for
Revenue Recognition from the beginning of the first quarter and changed the accounting method regarding
revenue recognition, and it has changed the calculation method for profit or loss of business segments accordingly.
The change reduced net sales of the “Pharmaceutical Wholesale Business” in the nine months ended December
31, 2021 by ¥1,097 million, while it did not affect the segment profit (operating profit). It increased net sales of the“Veterinary Drug Wholesale Business” by ¥0 million, while it did not affect the segment profit (operating profit).
2. Method of measurement for the amounts of net sales, income (loss), assets and other items for each reportablesegment
The method of accounting for the reportable business segments is generally the same as those stated in “Basis for
the Presentation of the Consolidated Financial Statements.”9

3. Information on net sales, income (loss), assets and other items by reportable segment
For the nine months ended December 31, 2020 (from April 1, 2020 to December 31, 2020)(Million yen)

Adjustment(Note 2)

Amountrecorded in
Quarterly
Consolidated
Statements ofIncome(Note 3)

Reportable segment
Pharmaceutical
Wholesale
Business
Net sales
Net sales to outside customers

Veterinary
Drug
Wholesale
Business

Pharmacy
Business

Total

Others(Note 1)

Total

386,224

12,4897,485

406,199

2,630

408,829-

408,829

5,917

1

0

5,919

1,861

7,780

(7,780)-

Total

392,142

12,491

7,485

412,118

4,491

416,609(7,780)408,829

Segment income (loss)(1,878)(37)

327(1,588)(127)(1,716)34(1,682)

Inter-segment net sales ortransfers(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as
wholesale of agricultural chemicals, nursing care service business, transportation business, andconsulting services for medical institutions.
2. Adjustment of segment income (loss) of ¥34 million refers to elimination of inter-segment transactions.
3. Adjustments are made to reconcile segment income (loss) to operating loss reported on the quarterly
consolidated statements of income.

For the nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021)
Reportable segment
Pharmaceutical
Wholesale
Business
Net sales
Net sales to outside customers
Inter-segment net sales ortransfers
Total
Segment income (loss)

Veterinary
Drug
Wholesale
Business

Pharmacy
Business

Total

Others(Note 1)

Total

(Million yen)Amountrecorded in
Quarterly
Adjustment
Consolidated(Note 2)
Statements ofIncome(Note 3)414,895

13,791

7,850

436,537

2,791

439,329-439,329

6,611

1

0

6,613

1,859

8,472

(8,472)-

421,507

13,792

7,850

443,150

4,651

447,801(8,472)439,329

1,688

162

318

2,169

(119)

2,050

36

2,086

(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as
wholesale of agricultural chemicals, nursing care service business, transportation business, andconsulting services for medical institutions.
2. Adjustment of segment income (loss) of ¥36 million refers to elimination of inter-segment transactions.
3. Adjustments are made to reconcile segment income (loss) to operating profit reported on the quarterly
consolidated statements of income.

10