Consolidated Financial Statements for the Second Quarter of
the Fiscal Year Ending March 31, 2024
[Japanese GAAP]
November 6, 2023
Company name: VITAL KSK HOLDINGS, INC.
Stock exchange listing: Tokyo Stock Exchange
Code number: 3151
URL: https://www.vitalksk.co.jp/english/
Representative: Mr. Taisuke Murai, President & CEO
Contact: Mr. Kiharu Takahashi, Executive Officer and General Manager of Corporate PlanningPhone: +81-3-5787-8565
Scheduled date of filing quarterly report: November 13, 2023
Scheduled date of commencing dividend payments: December 5, 2023
Preparation of supplementary explanatory materials: Yes
Quarterly financial results meeting: Yes (for institutional investors and analysts)(Amounts of less than one million yen are rounded down.)
1. Consolidated Results for the Second Quarter of the Fiscal Year Ending March 31, 2024
(April 1, 2023 – September 30, 2023)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Profit attributable to
Net sales
Operating profit
Ordinary profit
owners of parent
Six months ended
Million yen%
Million yen%
Million yen%
Million yen%
September 30, 2023
294,213
2,868
3,478 2,347 September 30, 2022
290,166
1,521
2,423
1,437
(Note) Comprehensive income: Six months ended September 30, 2023: ¥4,951 million [-%]
Six months ended September 30, 2022: ¥5,328 million [-%]
Basic earnings per
Diluted earnings per
share
share
Six months ended
Yen
Yen
September 30, 2023
45.78
September 30, 2022
27.42
(2) Consolidated Financial Position
Total assets

Net assets

Million yen

Equity ratio

Million yen%

321,745
102,766
As of September 30, 2023
297,316
100,165
As of March 31, 2022
(Reference) Equity: As of September 30, 2023: ¥101,539 million
As of March 31, 2023: ¥98,986 million

31.6
33.3

2. Cash Dividends
1stquarter-end
Yen

Cash dividends per share
2nd
3rd
Year-endquarter-end
quarter-end
Yen

Yen

Year ended
12.00
March 31, 2023
Year ending
19.00
March 31, 2024
Year ending
March 31, 2024 (forecast)(Note) 1 Revision to the forecast for dividends announced most recently: None

Total

Yen

Yen

27.00

39.00

20.00

39.00

3. Forecast of Consolidated Results for the Fiscal Year Ending March 31, 2024
(April 1, 2023 - March 31, 2024)(% indicates changes from the previous corresponding period.)
Net sales
Million yen

Operating profit% Million yen

Ordinary profit% Million yen

Profit attributableto owners of parent% Million yen%

Basic earnings
per share
Yen

Full year
576,000
4,700
6,000
5,200
102.37(Note) Revision to forecast of consolidated results announced most recently: None
* The percentage increase/decrease is not shown due to a change in presentation method. For details, please see(Change in method of presentation) in (3) Notes to Quarterly Consolidated Financial Statements of 2. Quarterly
Consolidated Financial Statements and Primary Notes.
* 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 “(4) Notes to Quarterly Consolidated Financial Statements (Accounting policies adopted
specially for the preparation of quarterly consolidated financial statements)” on page 10 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: None
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):
September 30, 2023: 51,902,976 shares
March 31, 2023: 61,224,796 shares2) Total number of treasury stocks at the end of the period:
September 30, 2023: 1,106,317 shares
March 31, 2023: 9,438,699 shares
3) Average number of shares during the period:
Six months ended September 30, 2023: 51,269,318 shares
Six months ended September 30, 2022: 52,451,916 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 from these forecasts due to a wide range of factors.
 The Company plans to hold a financial results briefing for institutional investors and analysts on November 10,
2023. The presentation materials to be used at the briefing will be posted on the Company’s website immediately
after the briefing.

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) Quarterly Consolidated Statements of Cash Flows ........................................................................... 8(4) Notes to Quarterly Consolidated Financial Statements ................................................................... 10(Notes on going concern assumption) ........................................................................................ 10(Notes in the case of significant changes in amount of shareholders’ equity)............................ 10(Accounting policies adopted specially for the preparation of quarterly consolidated
financial statements) ................................................................................................................. 10(Change in method of presentation) ........................................................................................... 10(Segment information) ............................................................................................................... 10

1

1. Qualitative Information on Quarterly Financial Results
The Group previously recognized income from the provision of sales information to manufacturers as
administrative service fee income under non-operating income but changed the method of presentation and thisincome is included in net sales from the first quarter of the consolidated fiscal year. As a result of this change,
the results for the first six months of the previous fiscal year have been retrospectively adjusted to reflect thechange in method of presentation.
For details, please see (Change in method of presentation) in (3) Notes to Quarterly Consolidated Financial
Statements of 2. Quarterly Consolidated Financial Statements and Primary Notes.

Explanation of Operating Results
The Japanese economy during the six months ended September 30, 2023 saw a resumption of economic
activity as COVID-19 became endemic, fueling expectation of a gradual economic recovery. However, at thesame time, continued global monetary tightening to conquer inflation could trigger a global economic downturn,and poses a downside risk to Japan’s economy. In addition, there is still a high degree of uncertainty in the outlook,with rising prices, supply constraints and financial and capital market volatility, and attention needs to be paid to
economic developments.
In the pharmaceutical wholesale business sector, which is the Group’s main business, the drug pricerevisions in April 2023 cut approximately ¥310 billion from national healthcare costs and, going forward,
discussions aimed at radically reforming policies and systems related to people’s lives and health such as thesocial security system and the drug pricing system are likely to increase and the policy of curbing drug costs islikely to be maintained. With pharmaceutical market development, manufacturing and distribution operations
also changing dynamically day by day, the solutions to pharmaceutical distribution related problems are also
becoming increasingly complex and the business environment remains challenging.
In light of such changes in the market structure and operating environment, the Group formulated its Longterm Vision 2035 from the fiscal year ending March 31, 2024, which is “to transform the future of medical careby transcending boundaries and “acting as a bridge” to cutting-edge medicines.” Based on this long-term vision,
the Group will expand medical care-related businesses with the aim of developing a sustainable distribution
structure for drugs and medical care-related products through independence and cooperation and contributing to
the resolution of social issues and the extension of healthy life expectancy. Furthermore, with “business model
innovation looking at next-generation capabilities” as its medium-term vision, the Group is implementing its fifth
Medium-Term Management Plan, spanning the three-year period from the year ending March 31, 2023 to theyear ending March 31, 2025. In the medium-term management plan, the Company has set out practical tasks to“1. Explore a pharmaceutical distribution model to adapt to changes in the market structure and meet market
characteristics,” “2. Evolve distribution and marketing models tailored to the advancement of DX in the field of
medical care,” and “3. Promote the Group management that meets Prime Market requirements.” By steadilysolving these issues, we will aim to further evolve as a company indispensable for local healthcare.
For the six months ended September 30, 2023, net sales were ¥294,213 million (compared with ¥290,166
million for the same period of the previous year), operating profit was ¥2,868 million (compared with ¥1,521
million for the same period of the previous year), ordinary profit was ¥3,478 million (compared with ¥2,423
million for the same period of the previous), and profit attributable to owners of parent was ¥2,347 million(compared with ¥1,437 million for the same period of the previous).
Performance results by business segment are as follows.
1) Pharmaceutical Wholesale BusinessIn the six months ended September 30, 2023, the pharmaceutical wholesale business posted an increase insales, as the negative impact of NHI drug price revisions and the suspension of handling of certain manufacturers,
as well as decreased sales of COVID test reagent and equipment, etc., were more than offset by the growth in2

products such as COVID-19 treatments. In addition, the Company negotiated prices while paying attention totransaction costs with each of its customers and, given the absence of an allowance for doubtful accounts forcertain major customers which was posted in the same period of the previous fiscal year, resulting insignificantly higher profits than in the previous year.
As a result of the foregoing, net sales were ¥277,201 million (compared with ¥273,830 million for the same
period of the previous year), and segment profit (operating profit) was ¥2,640 million (compared with ¥1,393
million for the same period of the previous year).
2) Pharmacy Business
The pharmacy business posted net sales of ¥9,386 million (compared with ¥9,009 million for the same
period of the previous year), reflecting, in addition to an increase of one store due to the business acquisition,
efforts to expand income from dispensing technical fees and income from pharmaceutical management fees aswell as an increase in the number of prescriptions received as a result of increased movement of people with thedowngrading of COVID-19 to a Class 5 infectious disease under the Infectious Diseases Act. Segment profit(operating profit) was ¥114 million (compared with ¥32 million for the same period of the previous year) due tothe effect of this sales growth as well as a significant decrease in amortization of goodwill.
3) Veterinary Drug Wholesale Business
The veterinary drug wholesale business recorded net sales of ¥5,589 million (compared with ¥5,314 million
for the same period of the previous year), driven by sales growth in companion animal operations. However,segment profit (operating profit) was ¥183 million (compared with ¥182 million for the same period of theprevious year), reflecting the impact of higher purchase prices.
4) Other Businesses
In the Other Business segment, net sales were 2,035 million yen (2,011 million yen in the same period of
the previous year) and segment loss (operating loss) was 108 million yen (segment loss of 146 million yen in thesame period of the previous year) due to increased revenue in the sports facility management business as a resultof increased human flow following the downgrading of COVID-19 to a Class 5 infectious disease under the
Infectious Diseases Act, as mentioned earlier. Segment loss (operating loss) was due to soaring electricity andfuel costs despite efforts to reduce expenses.

3

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly Consolidated Balance Sheets(Million yen)
As of March 31, 2023
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 September 30, 2023

19,029118,585
30,846
16,466
3,616(41)
188,50230,463
127,815
31,052
15,981
2,897(48)
208,163

20,37024,917
3,736
49,024

19,84825,026
4,183
49,058

818
2,558
3,377

750
3,408
4,158

44,642
12,771(1,002)56,411
108,813297,316

48,064
13,335(1,035)60,365
113,582
321,745(Million yen)
As of March 31, 2023
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
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 September 30, 2023

164,571
990
970
2,095
1,569
8,462
178,659

186,787
890
970
1,343
1,567
8,263
199,821

6,790
251
855
10,594
18,491
197,150

6,305
236
825
11,78919,157
218,979

5,000
12,81067,864(7,575)78,0995,000
5,272
68,809(983)
78,09919,972

22,709913

730

20,88623,4401,179
100,165
297,316

1,226
102,766
321,745

(2) Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated
Statements of Income
Quarterly Consolidated Statements of Income
Six Months Ended September 30, 2022 and 2023
(Million yen)
For the six months ended
September 30, 2022

For the six months ended
September 30, 2023

290,166
267,227
22,93921,4181,521

294,213
270,626
23,587
20,719
2,868

35
384

33
326

27

28

556
1,003

330
717

51
41
9
102
2,423

50
39
18
108
3,478

13
59
72

33
169
24
227

0
22
55
62

49
42
-

Dismantlement expense

-

47

Other

5

29

145
2,350
862
1,487
49
1,437

169
3,536
1,139
2,397
50
2,347

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using
equity method
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 investment securities
Soil treatment cost

Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

6

Quarterly Consolidated Statements of Comprehensive Income
Six Months Ended September 30, 2022 and 2023
(Million yen)
For the six months ended
September 30, 2022
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

7

For the six months ended
September 30, 2023

1,487

2,397

3,806

2,322

(178)

(182)

213

413

3,841
5,328

2,553
4,951

5,279

4,900

49

50

(3) Quarterly Consolidated Statements of Cash Flows(Million yen)
For the six months ended
September 30, 2022

For the six months ended
September 30, 2023

2,350
1,460
22
171

3,536
1,505
49
69

660

39

(60)
(2,093)
(419)
(113)
51

(3)
(226)
(359)
(130)
50

(27)

(28)

(3)

(126)

(13)

(31)

(4,042)
344
713
4,301
2,563
(794)
5,069
408
(51)
(2,255)
857
5
4,035

(9,161)
(183)
520
28
22,158(298)
17,407342(50)(1,906)897
76
16,767

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Amortization of goodwill
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in retirement benefit liability
Interest and dividend income
Rental income
Interest expenses
Share of loss (profit) of entities accounted forusing equity method
Loss (gain) on sale and valuation of investment
securities
Loss (gain) on sale and retirement of property,
plant and equipment
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in accounts receivable - other
Decrease (increase) in guarantee deposits
Increase (decrease) in trade payables
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Income taxes refund
Other, net
Net cash provided by (used in) operating activities

8

For the six months ended
September 30, 2022
Cash flows from investing activities
Net decrease (increase) in time deposits
Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Proceeds from redemption of investment securities
Loan advances
Proceeds from collection of loans receivable
Purchase of shares of subsidiaries resulting inchange in scope of consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings
Repayments of lease liabilities
Proceeds from disposal of treasury shares
Purchase of treasury shares
Dividends paid
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents(150)(1,108)

400
(549)

102

116

(306)
(183)
265
100
(60)
25

(1,583)
(5)
277
200
(0)
11

-

(147)

113
(1,200)(268)(1,549)

(485)
(379)
(998)
(745)
(4)
(2,611)
223
23,239

(100)
(485)
(481)
0
(956)
(1,401)(4)(3,429)11,78915,147

Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents at end of period

29
23,4929

For the six months ended
September 30, 2023

26,936

(4) Notes to Quarterly Consolidated Financial Statements(Notes on going concern assumption)
For the six months ended September 30, 2023 (from April 1, 2023 to September 30, 2023)
Not applicable.
(Notes in the case of significant changes in amount of shareholders’ equity)
For the six months ended September 30, 2023 (from April 1, 2023 to September 30, 2023)
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 for thecurrent 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.
(Change in method of presentation)
The Group previously recognized income from the provision of sales information to manufacturers as
administrative service fee income under non-operating income but changed the method of presentation and thisincome is included in net sales from the first quarter of the consolidated fiscal year.
Based on its medium-term vision “business model innovation looking at next-generation capabilities” andunder a basic policy of “evolution of distribution and marketing model in step with progress of DX in healthcare,” the Group positions information provision as an important operating activity given the increasing
importance of information provision services and the purpose of this change in presentation method is to properly
present the results of the Group’s operating activities.
The quarterly consolidated financial statements for the first three months of the previous consolidated fiscal
year and the consolidated financial statements for the previous consolidated fiscal year have been restated toreflect this change in presentation method.
As a result, administrative service fee income of ¥790 million, which had been presented under under nonoperating income, has been restated as net sales, resulting in net sales of ¥290,166 million and operating profitof ¥1,521 million. Ordinary profit and profit before income taxes are not affected by this change.
In addition, accounts receivable-other of ¥199 million, which had been presented in current assets, has been
restated as notes and accounts receivable-trade, resulting in notes and accounts receivable-trade of ¥118,585
million.
In addition, in the consolidated statement of cash flows for the previous fiscal year, "Office work fee" and"Office work fee received" that were shown under "cash flows from operating activities" were changed to"increase(decrease) in trade receivables." It is included in the amount. As a result, "Office work fee" of -790
million yen and "Office work fee received" of 784 million yen, which were shown in "Cash flows from operating
activities," have been reclassified to "Increase(decrease) in trade receivables." , the "increase(decrease) in tradereceivables" was -9,161 million yen.
(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 to decide
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,
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,10

materials, etc. to medical institutions, such as hospitals, clinics, and pharmacies. The “Pharmacy Business” isengaged 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.

11

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.”
Profit in the reportable segments is based on operating profit.
Inter-segment revenues and transfers are calculated at prevailing market prices.
3. Information on net sales, income (loss), assets and other items by reportable segment
For the fiscal year ended March 31, 2023 (from April 1, 2022 to September 30, 2023)
Reportable segment

Net sales
Net sales to outside
customers
Inter-segment net
sales or transfers
Total
Segment income (loss)

PharmaVeterinary
ceutical Pharmacy
Drug
Wholesale Business Wholesale
Business
Business

273,830

9,009

5,125
278,956
1,393(Million yen)Amountrecorded in
Adjustment Consolidated(Note 2)
Statementsof Income(Note 3)

Total

Others(Note 1)

Total

5,314

288,155

2,011

290,166-

290,166

3

0

5,128

1,263

6,392

(6,392)

-

9,013
32

5,314
182

293,284
1,609

3,274 296,559
(146)
1,463

(6,392)
58

290,166
1,521(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as wholesale of agriculturalchemicals, nursing care service business, transportation business, and consulting services for medical institutions, and thesports facility management business.
2. Adjustment of segment income (loss) of ¥58 million refers to elimination of inter-segment transactions.
3. Adjustments are made to reconcile segment income (loss) to operating profit reported on the consolidated statements ofincome.

For the fiscal year ending March 31, 2024 (from April 1, 2023 to September 30, 2023)
Reportable segment

Net sales
Net sales to outside
customers
Inter-segment net
sales or transfers
Total
Segment income (loss)

PharmaVeterinary
ceutical Pharmacy
Drug
Wholesale Business Wholesale
Business
Business

277,201

9,386

5,276
282,478
2,640(Million yen)Amountrecorded in
Adjustment Consolidated(Note 2)
Statementsof Income(Note 3)

Total

Others(Note 1)

Total

5,589

292,178

2,035

294,213-294,213

6

0

5,283

1,300

6,583

(6,583)

-

9,392
114

5,589
183

297,461
2,938

3,335 300,797
(108)
2,829

(6,583)
39

294,2132,868(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as wholesale of agriculturalchemicals, nursing care service business, transportation business, and consulting services for medical institutions, and thesports facility management business.
2. Adjustment of segment profit (loss) of ¥39 million refers to elimination of inter-segment transactions.
3. Adjustments are made to reconcile segment income (loss) to operating profit reported on the consolidated statements ofincome.

12