Consolidated Financial Statements for the First Quarter of
the Fiscal Year Ending March 31, 2022
[Japanese GAAP]
August 3, 2021
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: August 10, 2021
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 First Quarter of the Fiscal Year Ending March 31, 2022
(April 1, 2021 – June 30, 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
Three months ended
Million yen%
Million yen%
Million yen%
Million yen%
June 30, 2021
142,916
5.8
377
1,067
644
June 30, 2020
135,075
(5.3)
(932)
(225)
(257)
(Note) Comprehensive income: Three months ended June 30, 2021: ¥2,228 million [(35.1)%]
Three months ended June 30, 2020: ¥3,434 million [-%]
Basic earnings per
Diluted earnings per
share
share
Three months ended
Yen
Yen
June 30, 2021
11.67
June 30, 2020
(4.69)(2) Consolidated Financial Position
Total assets

Net assets

Million yen

Equity ratio

Million yen%

As of June 30, 2021
333,676
106,090
311,401
103,916
As of March 31, 2021
(Reference) Equity: As of June 30, 2021: ¥105,090 million
As of March 31, 2021: ¥102,943 million

31.5
33.1

2. Cash Dividends
1stquarter-end
Yen

Annual dividends
2nd quarter- 3rd quarterYear-end
end
end
Yen

Yen

Year ended
12.00
March 31, 2021
Year ending
March 31, 2022
Year ending
12.00
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
Million yen

Operating profit% Million yen

Ordinary profit% Million yen

Profit attributableto owners of parent% Million yen

Second quarter
270,900
1.6
600
1,900 334.9
1,200(cumulative)
Full year
542,200
1.0
1,600
4,200 505.7
4,000(Note) Revision to forecast of consolidated results announced most recently: None

Basic earnings
per share

%

Yen

173.5

21.73

241.4

72.42

* 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):
June 30, 2021: 61,224,796 shares
March 31, 2021: 61,224,796 shares2) Total number of treasury stocks at the end of the period:
June 30, 2021: 6,059,619 shares
March 31, 2021: 5,990,796 shares
3) Average number of shares during the period:
Three months ended June 30, 2021: 55,227,622 shares
Three months ended June 30, 2020: 54,957,263 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) ............................................................................................................................ 9

1

1. Qualitative Information on Quarterly Financial Results
Explanation of Operating Results
The Japanese economy during the three months ended June 30, 2021 was faced with a national crisis as astate of emergency was declared or focused anti-infection measures were adopted across Japan in response to
the spread of COVID-19 which still continued.
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 ending 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 three months ended June 30, 2021, net sales were ¥142,916 million (105.8% of that of the same
period of the previous year), operating profit was ¥377 million (operating loss of ¥932 million in the same
period of the previous year), ordinary profit was ¥1,067 million (ordinary loss of ¥225 million in the same
period of the previous year), and profit attributable to owners of parent was ¥644 million (loss attributable toowners of parent of ¥257 million in the same period of the previous year).
While the application of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020) reduced net sales by ¥356 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 gradually recovering forthe three months ended June 30, 2021. Also, in the previous year, we couldn’t have enough time for pricenegotiation 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 theapproaches for improvement of commercial transaction practices of ethical drugs which we had worked on fora long time. For the three months ended June 30, 2021, we are making our utmost efforts towards promotion of
the negotiation for unit price-based contract, and the deal with optimized price in consideration of the value of2

pharmaceutical products, in line with the purpose of Guidelines for the Improvement of Commercial
Transaction Practices of Ethical Drugs, to maintain the structure to provide a stable supply of pharmaceuticalproducts. In addition, we have focused on the cost reduction by reviewing operational processes.
As a result, net sales were ¥134,777 million (105.7% of that of the same period of the previous year), andsegment profit (operating profit) was ¥290 million (¥896 million of segment loss in the same period of theprevious year).
The application of the Accounting Standard for Revenue Recognition reduced net sales by ¥357 million,
while it did not affect the segment profit (operating profit).
2) Pharmacy BusinessIn the pharmacy business, net sales were ¥4,437 million (108.9% 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 income (operating profit) was ¥39 million(segment loss of ¥70 million in the same period of the previous year).
Additionally, from the three months ended June 30, 2021, the “Pharmacy Business,” which was previously
included in the “Others,” has been classified as a reportable segment as a result of the review of theclassification method for business segments.
3) Veterinary Drug Wholesale BusinessIn the veterinary drug wholesale business, net sales were ¥2,581 million (104.5% of that of the same
period of the previous year), and segment income (operating profit) was ¥106 million (130.1% of that of thesame period of the previous year) following the recovery in the market.
The application of the Accounting Standard for Revenue Recognition increased net sales by ¥0 million,
while it did not affect the segment profit (operating profit).
4) Other Businesses
In other businesses, net sales were ¥1,119 million (109.8% of that of the same period of the previous year),and segment loss (operating loss) was ¥45 million (segment loss of ¥44 million in the same period of theprevious year).

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 June 30, 2021

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

35,258126,250
29,26814,7584,505(67)
209,973

19,10820,6704,907
44,686

19,264
20,526
5,309
45,101

3,111
1,480
4,591

3,132
1,409
4,541

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

57,781
16,837(559)
74,059123,702333,676(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 June 30, 2021

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

179,335
1,200
5,370
284
1,944
–
9,808
197,942

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

8,487
230
5,851
15,07329,642
227,585

5,000
12,81060,285(5,025)73,0705,000
12,81060,930(5,077)73,66327,652

29,303

2,220

2,123

29,87331,426972
103,916
311,401

1,000
106,090
333,676

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income
Three Months Ended June 30, 2020 and 2021
(Million yen)
For the three months ended
June 30, 2020
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 (loss)
Extraordinary income
Gain on sales of non-current assets
Other
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

6

For the three months ended
June 30, 2021

135,075
125,908
9,166
174
151
9,189
10,121(932)

142,916
132,694
10,221––
10,221
9,843
377

16
204

11
178

22

3

371
131
746

390
158
742

17
21
0
39
(225)

24
21
7
53
1,067

–
0
0

11
0
11

–
37
37
(262)
(28)
(234)
22
(257)

19
1
21
1,057
383
674
29
644

Quarterly Consolidated Statements of Comprehensive Income
Three Months Ended June 30, 2020 and 2021
(Million yen)
For the three months ended
June 30, 2020
Profit (loss)
Other 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 three months ended
June 30, 2021

(234)

674

3,476

1,625

(73)

(97)

266

25

3,669
3,434

1,553
2,228

3,411

2,198

22

29

(3) Notes to Quarterly Consolidated Financial Statements(Notes on going concern assumption)
For the three months ended June 30, 2021 (from April 1, 2021 to June 30, 2021)
Not applicable.
(Notes in the case of significant changes in amount of shareholders’ equity)
For the three months ended June 30, 2021 (from April 1, 2021 to June 30, 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 under review. The Company now
recognizes revenue as the amount expected to be received in exchange for promised goods or services whencontrol of said goods or services is transferred to the customer.
Previously, the Company had recorded provision for sales returns based on the amount equivalent to grossprofit regarding sales with a right of return. The Company has since changed the recognition method for goods
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 under review has
been added to or subtracted from retained earnings at the beginning of the quarter, which nevertheless had no
impact on the balance at the beginning of the quarter.
As a result of the above applications, net sales for the first quarter under review declined ¥356 million, costof sales ¥354 million, reversal of provision for sales returns ¥0 million, and provision for sales returns ¥2
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,
July 4, 2019) and other standards from the beginning of the first quarter under review. In accordance with thetransitional treatments prescribed in Article 19 of the Accounting Standard for Fair Value Measurement andArticle 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), theCompany plans to apply the new accounting policies stipulated by the Accounting Standard for Fair Value
Measurement and other standards through the future. The decision does not affect the quarterly consolidated

8

financial statements.

9

(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,
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 under review 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 first quarter under review by ¥357
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 “Basisfor the Presentation of the Consolidated Financial Statements.”10

3. Information on net sales, income (loss), assets and other items by reportable segment
For the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)
Reportable segment
PharmaceVeterinary
uticalPharmacy
Drug
Wholesale Business Wholesale
Business
Business

Total

Others(Note 1)

Total

(Million yen)Amountrecorded in
Adjustment Consolidated(Note 2)Financial
Statements(Note 3)

Net sales
Net sales to outside
customers
Inter-segment
net
sales or transfers

127,510

4,075

2,470

134,055

1,019

135,075―

135,075

2,039

0

―

2,040

616

2,657

(2,657)―

Total

129,549

4,076

2,470

136,096

1,636

137,732(2,657)135,075

Segment income (loss)

(896)

(70)

82

(885)

(44)

(929)

(2)

(932)

(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as wholesale ofagricultural chemicals, nursing care service business, transportation business, and consulting services for medical
institutions.
2. Adjustment of segment income (loss) of ¥(2) 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 fiscal year ending March 31, 2022 (from April 1, 2021 to March 31, 2022)
Reportable segment
PharmaceVeterinary
uticalPharmacy
Drug
Wholesale Business Wholesale
Business
Business

Total

Others(Note 1)

Total

(Million yen)Amountrecorded in
Adjustment Consolidated(Note 2)Financial
Statements(Note 3)

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

134,777

4,437

2,581

141,796

1,119

142,916―

142,916

2,211

1

0

2,212

626

2,839

(2,839)―136,988

4,438

2,581

144,008

1,746

145,755(2,839)142,916

290

39

106

437

(45)

391

(13)

377

(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as wholesale ofagricultural chemicals, nursing care service business, transportation business, and consulting services for medical
institutions.
2. Adjustment of segment income (loss) of ¥(13) 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.

11