FY2018(Fiscal Year Ending March 31, 2019)

Financial Results
Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Contents
1. Consolidated Financial Results for Fiscal Year
Ended March 31, 20192

Healthcare Mall Development

21

Consolidated Earnings(YoY)

3

Community-based Healthcare Vision

23

FY2018 Profit & Losses (by Business Segment)

4

Hospital Management Support

24

Medical Practice Support Data (Consulting)5

Medical Practice Support Data (Rental, Leasing & Installment)

6

Pharmacy Data (Sales & Number of Pharmacies)

7

Topics: Restructuring of hospital beds—an example ofsupport for transition to a long-term medical care,rehabilitation, and accommodation facility for the elderly(kaigo-iryou-in)

25

Pharmacy Data (Prescriptions & Unit Price)8

Creation of High-value Pharmacies

26

Trends for Major Items in the Basic Dispensing Fee and Technical
Fee Components
9Creation of High-Value Pharmacies: Growth Strategy

27

Synergies with Bunkyo

30

Balance Sheet as of March 31, 201911

Overview of Luft Medical Care, Inc.

32

Statement of Cash Flows as of March 31, 201912

Collaboration with Luft Medical Care, Inc.

33

Business model34

2. Consolidated Financial Forecast for Fiscal Year Ending
March 31, 202013
Consolidated Financial Forecast for Fiscal Year Ending
March 31, 2020

14

4. APPENDIX

35

Quarterly Earnings Trends (by Business)

36

Quarterly Earnings Trends (Data Summary)

37

Medical Practice Support Data38

3. Medium/Long-term Outlook and Activities

15

Positioning and Realization of the Medium-termManagement Plan

Pharmacy Data

39

16

Pharmacies

40

Themes in the Medium-term Management Plan

17

Progress of Medium-Term Management Plan

18

Expanding Business Domains in Healthcare Adjacent
Businesses

41

Implementing DtoD

19

Image of the Completed Japanese Healthcare Business
Model

42

Provision of Added Value and Expansion of Earnings
Opportunities Through the Promotion of Healthcare Malls
Explanation of theappropriate use offinancial result
forecasts.

20

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. ）Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Copyright Sogo Medical Co., Ltd All Rights Reserved.

1

1

Consolidated Financial
Results for Fiscal Year
Ended March 31, 2019
Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Consolidated Earnings(YoY)（¥million）

Sales(left axis)
Ordinary income(right axis)

150,000
135,000
120,000

8,000

7,228

105,000

7,000
5,607

90,000

6,000
5,000

75,0004,000

60,0003,000

45,0002,000

30,0001,000

15,0000FY2017 Actual（\million）

9,000

144,630

135,431（¥million）

FY2018 Actual0

Net sales

FY2017FY2018FY2018ActualActual

Act/Plan (%)

135,431 144,630

YoY

YoY (%)

9,199

6.8%

99.8%

5,411

-1,777-24.7%

93.9%(100.0%)(100.0%)(5.3%)(3.7%)

Operating income

7,189

Ordinary income

7,228

5,607

-1,621-22.4%

96.7%

4,243

3,246

-996

-23.5%

95.3%(3.1%)(2.2%)

141.74108.47-33.27-23.5%

95.4%

Quarterly Profit
attributable toowners of parent
Quarterly net income
per share (¥)(5.3%)(3.9%)*On April 1, 2018, Sogo Medical implemented a 2:1 common stock split.
Net income per share prior to this date was calculated based on the assumption
this stock split had been carried out.
*The figures in parentheses represent the ratio to total sales.0
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3

FY2018 Profit & Losses (by Business Segment)（\million）

Year-on-year fluctuation factors

FY2017 Actual

FY2018 Actual

135,431

144,630

9,199

6.8%

24,54837,384

12,835

52.3%

Consulting

2,247

2,390

143

Rental

5,676

7,929

2,252

39.7% Rental +1,502, sales of subrental +750

Leasing/Installment

9,700

11,156

1,455

15.0% sales of sublease +771, Leasing/installment +360, merchandise sales ＋323

Others

6,923

15,9078,983

129.8% In-hospital store sales, etc. +9,458

109,918

106,282-3,636

-3.3%

964

964

0

0.1%

7,189

5,411

-1,777-24.7%

884

995

111

7,139

5,311

-1,828

-22

-1

20

-

(811)

(892)

-80

-

Net sales
Medical practice support

Pharmacies
OthersOperating income
Medical practice support
Pharmacies
OthersElimination & Corporate

YoY

YoY (%)

6.4% Consulting +161

Existing pharmacy sales -4,951, pharmacies opened in FY2017 +825,
pharmacies opening FY2018 +790

12.6% In-hospital store sales, etc. +76-25.6% Profit decline in tandem with sales drop

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4

Medical Practice Support Data (Consulting)（¥million）

2,500
2,250
2,000

■DtoD-concierge advertising■Start-up support, etc.
■Transfer support■Consulting

2,390(+6.4%)

2,247

42

45

183

(-6.3%)(+1.4%)

285(-5.9%)

180

Start-up support

1,500

FY2018ActualActual

YoY

179

185

6

35

42

7

4,963

4,591

-372

Full-time

50

47

-3

Part-time

4,913

4,544

-369

March 31,

March 31,

2018

2019

74,89879,787

4,889

1,680

1,728

48

Number of cases to support medical practice
succession and opening of private practices

Total for transfer support

304
1,750

FY2017

1,250
1,000
750

1,717

(+9.4%)

1,879

500
250
0

Doctors registered for DtoD

FY2017 Actual

FY2018 Actual(No. of people)

Succeed Members (cases)

YoY

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5

Medical Practice Support Data（Rental, Leasing & Installment)

Sales of subrental(¥million)

7,929

8,000
6,000
4,000

Rental(+39.7%)

5,676
6,260

(+31.6%)
Number of rental TVs in

4,758

2,000
0

(¥million)
12,00010,000
8,000
6,000
4,000
2,000
0

917
FY2017 Actual

Sales of sublease
Merchandise sales

9,700

1,668

(+81.8%)FY2018 Actual

March 31,

2018

2019

216,520

217,116

YoY

596

YoY (%)

0.3%*Includes sub-rental.

Leasing/installment

11,156 (+15.0%)
1,666
1,576

(+24.1%)(+29.7%)

7,142

7,913

(+10.8%)FY2017 Actual

FY2018 Actual

1,342
1,215

operation (TVs)

March 31,

FY2017 Actual FY2018 Actual

Leasing/installment volume

9,515

11,296YoY

1,780

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YoY (%)

18.7%

6

Pharmacy Data (Sales & Number of Pharmacies)(¥million)
110,000＜Dispensing sales＞■Existing pharmacies
Openings in FY2017■Openings/closing in FY2018＜OTC sales, etc.＞
Sales of OTCs, etc.

105,000

FY2018 Actual

109,918

106,282-3,636-3.3%

107,919

104,247-3,672-3.4%

Existing pharmacies

105,905

100,954-4,951

-4.7%

1,316

2,141

825

62.7%

698

1,151

453

64.9%

1,998

2,034

36

1.8%

Pharmacies

109,918
1,998
698
1,316

FY2017 Actual

Dispensing sales
106,282(-3.3%)

2,034(+1.8%)

Pharmacies opened in FY2017

1,151(+64.9%)Pharmacies opened/closed in FY2018

2,141(+62.7%)

OTC sales

YoY

YoY (%)

100,000

95,000105,905

100,954(-4.7%)

90,00085,00080,000FY2017 Actual

FY2018 Actual

FY2017 Actual

FY2018 Actual

687
18
8
4
6
5

698
17
7
5
5
6

Number of pharmacies
Number of new openings
Start-up support portion
Existing pharmacy portion
M&A portion
Number of closings

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7

Pharmacy Data (Prescriptions & Unit Price)

Dispensing fee unit price Dispensing fee unit price(in thousands)

14,000Technical fee unit price Technical fee unit priceAll pharmacies
Existing pharmacies*

12,252

12,252*(¥)

12,487

10,00012,370*12,0008,000

10,000
8,000

6,000

6,000

4,000

4,000

8,790

8,348

6,480

6,105

2,310

2,243

FY2017 Actual

FY2018 Actual

2,000

2,000
0

Prescription unit price Prescription unit price0
FY2017 Actual

FY2018 Actual

FY2017FY2018ActualActual

FY2017FY2018ActualActualYoY

YoY(％)All pharmacies

12,252

12,487

235

1.9%

99.4%

Prescription unit price

8,790

8,348 -442

-5.0% 100.8%

Existing pharmacies*

12,252

12,370

118

1.0%

-

Dispensing fee unit price

6,480

6,105 -375

-5.8% 100.2%

2,310

2,243

-2.9% 102.7%

vs.
Plan(%)*Comparison with the pharmacies that were opened in or before the year ended
March 31, 2018.
Excluding the pharmacies that were closed during the year ended March 31, 2018.

Te

Technical fee unit price

YoY

-67

YoY (%)

vs.
Plan(%)* Prescription unit price = Dispensing fee unit price + Technical fee unit price
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8

Trends for Major Items in the Basic Dispensing Fee
and Technical Fee Components（pharmacies）■ Basic Fee 1 (41 points) ■ Basic Fee 2 (25 points)■ Basic Fee 3 (15 points) ■ Special Basic Fee (10 points)

800（pharmacies）

Regional support program premium (32 points)
No regional support program premium (0 points)

800

600

600
287

282

304

193

203

218

494

494

483

302

463
2

400

12

200

4

396

394

2

386

400

200

386

213
0
2018/03910

92018/04

2019/03

2019/04

0*The figures for March 2018 include two pharmacies that wereclosed and exclude one pharmacy that was temporarily closed.
*The figures for April 2018, March 2019, and April 2019 exclude
one pharmacy that was temporarily closed.

2018/032018/04
2019/03
2019/04*Basic dispensing fee premium in FY2017*The figures for March 2018 include two pharmacies that wereclosed and exclude one pharmacy that was temporarily closed.
*The figures for April 2018, March 2019, and April 2019 exclude
one pharmacy that was temporarily closed.
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9

Trends for Major Items in the Basic Dispensing Fee
and Technical Fee Components

Guidance fee premium owing to number of primary pharmacists (left axis)
Number of primary pharmacist consent forms received (left axis)
Number of primary pharmacists (right axis)

Premium 3 (26 points)
Premium 1 (18 points)

Premium 2 (22 points)
No premium (0 points)（cases）

600,000

770

863（No. of people）

900

480,378
400,000450

2018/03140

98

392,625600

200,000

300
55,95961,98500

2018/03
2019/03*The number of primary care pharmacists is on a single-month basis.
2018/04

127

209

145

206

（%）

100.0

Number of pharmacies with a concentration ratio of less （pharmacies）
than 85% (right axis)
400
Concentration ratio (left axis)

95.0
90.1

87.7

350

90.0
300
2019/03

291

179

96

131

85.0
297

327

80.0
*The figures for March 2018 include two pharmacies that wereclosed and exclude one pharmacy that was temporarily closed.
*The figures for April 2018, March 2019, and April 2019 exclude
one pharmacy that was temporarily closed.

75.0

250
200

2018/03
2019/03* The concentration rates reflect the results of Sogo Medical Co., Ltd.
on a stand-alone basis.
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10Balance Sheet as of March 31, 2019（\million）

FY2017
Total assets

FY2017Main sources of changes

YoY

89,74893,5603,812

47,485

47,100-384(Cash and deposits)

14,538

10,883Current assets-3,654 Acquisition of equity in Bunkyo -3,575(Notes and accounts receivable-trade)

20,536

21,138602(Inventories)

5,787

6,542

755

Noncurrent assets

42,263

46,4604,196(Property, plant and equipment)

25,44027,225

1,784 For-lease assets (rental assets) +1,338(Intangible assets)

10,502

12,874

2,371 Goodwill +2,530

53,221

54,8901,669

33,59832,589-1,00820,037

19,819-217

Total liabilities
Current liabilities(Notes and accounts payable-trade)(Current portion of long-term loans payable)
Noncurrent liabilities(Long-term loans payable)

4,429

5,112

682

19,62322,3002,677

13,831

15,792

1,961 New loans +7,200, repayments -5,370

2,754

3,090

335

23,52926,616

3,086

Total net assets

36,526

38,6692,143

Total liabilities and net assets

89,74893,560

3,812

Net assets per share (\) *1

1,210.6

1,281.8

71.1

Capital adequacy ratio (%)

40.4

41.0

0.6

Net D/E ratio (times) *2

0.25

0.41

0.16

(Long-term accounts payable-installment purchase)(Interest-bearing debts)

Net income +3,246, Dividends from retained
earnings -898

*1: On April 1, 2018, Sogo Medical implemented a 2:1 common stock split. Net income per share prior to this date was calculated based on the assumption this stock split had been carried out.
*2: Net D/E ratio = Net interest-bearing liabilities (interest-bearing liabilities – cash and deposits) / shareholders’ equity + interest-bearing debt; this includes the leasing receivables and installment
receivables posted to the balance sheet

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11

Statement of Cash Flows as of March 31, 2019（\millions）

FY2016
Net cash provided by operating activities

FY2017FY2018Change10,931

10,6303,852-6,777

Income before income taxes and minority interests

6,391

7,105

5,607

-1,498Depreciation

3,902

3,971

3,893

-78

Impairment loss

48

123

0

-123

Amortization of goodwill

987

1,243

1,321

77

Decrease (increase) in notes and accounts receivable-trade

1,127

1,016

-370

-1,386

Income taxes paid

-2,222-2,778-3,164-385-9,933-2,963-6,624-3,660Purchase of own-used assets-3,152-1,875-2,183-307

Purchase of property for lease

-264

-745

-1,483-738-6,440-485-3,779-3,2933,301-3,871

-945

2,926

Proceeds from long-term loans payable

10,933

3,000

7,200

4,200

Repayment of long-term loans payable-4,446-4,614-5,326

-711

-324

-276

-235

40

-1,924-1,266-1,268

-2

-

-

-

-

-710

-785

-898

-112

Net increase in cash and cash equivalents

4,299

3,795

-3,717-7,512

Cash and cash equivalents at end of period

10,655

14,45010,733-3,717

Investment in plant and equipment-3,416-2,620-3,666-1,046

Net cash used in investing activities

Purchase of investments in subsidiaries resulting in change
in scope of consolidation
Net cash used in financing activities

Repayments of lease obligations
Repayments of installment payables
Purchase of treasury stock
Cash dividends paid

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12

2

Consolidated Financial
Forecast for Fiscal YearEnding March 31, 2020
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Consolidated Financial Forecast for Fiscal YearEnding March 31, 2020（\million）

2Q

FY2018FY20192Q PlanPlan

70,101 144,630

78,161

165,313

Medical practice support

18,321

37,384

24,646

Pharmacies

51,295 106,282

ActualNet sales

OthersActualYoY

Interim
YoY

Full year

YoY

YoY

YoY

8,060

11.5%

20,683

14.3%

53,480

6,325

34.5%

16,09643.1%

53,020110,836

1,725

3.4%

4,554

4.3%

484

964

495

997

11

2.3%

33

3.4%

Gross profit

10,67822,715

12,39227,003

1,714

16.1%

4,288

18.9%

SG&A

8,695

17,303

10,226

20,636

1,531

17.6%

3,333

19.3%

Operating income

1,983

5,411

2,166

6,367

183

9.2%

956

17.6%

Ordinary income

2,100

5,607

2,236

6,510

136

6.5%

903

16.1%

Profit attributable to owners of parent

1,147

3,246

1,261

3,672

114

9.9%

426

13.1%

Net income per share (¥)

38.3

108.4

42.1

122.6

3.8

-

14.2

-

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14

Medium/Long-term
Outlook and Activities-Progress of Action 2020-

3

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Positioning and Realization of the Medium-termManagement Plan
Contribute to the creation of an evenbetter society by support good
healthcare
Prepare a three-year medium-term management plan
to fill the gaps with current operation for achievementof our FY2027 vision

FY2027 Vision
Completion of a Japanese healthcare business model

Develophealthcare
mallsCurrent medium-term management plan
(FY2017 – FY2019)
Action 2020—Realizing a Japanese healthcare business modelPrevious medium-term management plan

Manageme Create highnt support -value
pharmaciesforhospitals

Build an infrastructure for aregional healthcare network(FY2014-FY2016)
Further Challenge—Toward a better society inwhich people can live with a sense of security

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16

Themes in the Medium-term Management Plan (FY2019 Vision)• Divide hospitals by function• Doctors to become specialists• Reform doctor workstyle• Revise pharmacy
compensation and entry byother industries• Divide hospitals by function• Reorganize hospital beds

• Revise pharmacy compensationand entry by other industries• Home healthcare• Remote guidance for taking
medication• Establish pharmacy functions
within a comprehensive
regional healthcare network

1

Develop
Healthcare
Malls

2

Support
Hospital
Management

3

CreateHigh-Value
Pharmacies

4

To Achieve
Our
Long-Term
VisionSocial infrastructure acting as core facilities for medical
treatment, nursing care, and support for daily life

Toward 200 Locations

Support functional specialization and coordination tobuild an integrated community care system
Toward 37 Hospital Management Support Cases

Support an integrated community care system withpharmacies that serve as general healthcare stations
Organic growth of 2.3 million prescriptions (20%)

Enhancement/strengthening of existing businesses
and scope expansion of health-related businesses

Building a Platform for Regional Healthcare Networks
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17

Progress of Medium-Term Management Plan
1

Develop
Healthcare
Malls

Toward 200 Locations

Securing good properties is becoming difficult due to therising property prices and rents. However, the number ofcandidate properties is growing. We will continue securing
properties that can be stably operated over the medium- and long-term and work on developing healthcare mallswith a focus on quality.

2

Support
Hospital
Management

Toward 37 HospitalManagement Support Cases

Consultations concerning business succession
and rebuilding are increasing. However, it often
takes time before they develop into actual
transactions.

3

CreateHigh-Value
Pharmacies

Organic growth of
2.3 million prescriptions(20%)

The number of prescriptions prepared is growing
steadily in the pharmacies we operate within
healthcare malls. In addition, an increase inprescriptions following the opening of newpharmacies has made a contribution.

4

To Achieve
Our
Long-Term
VisionEnhancement/
strengthening of existing
businesses and scope
expansion of health-related
businesses

Bunkyo Co., Ltd. joined our group in the April
2018 as a subsidiary. We are working on
increasing sales channels to large hospitals andexpanding earnings opportunities through the
opening of convenience stores and cafes inhealthcare malls.

Working on building infrastructure to achieve the vision for
the 50th period (FY ending March 31, 2028)
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18

Implementing DtoD
Doctor to Doctor

79,78780,00574,89869,15962,42956,505

2015/03

2016/032017/032018/03

2019/03 2019/04/17

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19

Provision of Added Value and Expansion of Earnings
Opportunities Through the Promotion of Healthcare Malls
We will indefinitely provide local communities with high value-added functions and services for both medical
institutions and patients.
We will aim to maximize stock income for the entire group centered on pharmacies by attracting more clinics
and consolidating our services.
Planning

Development

Opening

Provide community Information on health,functionsprevention, and aged care

Provide and improveadded value

Healthcare mallPatients

Medicinepharmacy
collaboration

Convenie
nce store

Primary carepharmacy
Primary carepharmacists

Open clinics ina healthcare mall

Café

Sogo
Pharmacy

BunkyoHospital
Somtech Co., Ltd.
GM Co., Ltd.
Design andconstruction of
medical facilities

Provide community
functions

Property owner
Sogo Medipro
Co., Ltd.

Sogo Real
Estate Co., Ltd.

S.M.E. Co.,Ltd.

Paramedical staff
introduction anddispatch

Lease andmanagement of
medical facilities

Pharmaceuticals
wholesaler

Medical practice opening support
Consulting

Sogo Care
Network Co., Ltd.
Sun Villa Co., Ltd.
Operation of feepaying residentialtype nursing homes

Hokendohjins
ha Inc.
Healthcare
information service

Bunkyo Co.,Ltd.

Operation of
hospital stores,
restaurants, etc.

Sogo Medical Co., Ltd.

RentalLeasing
Installment

Risk

Management support

Dispensing pharmacies

Sogo Medical Group
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20

Healthcare Mall Development
 Medical Mall machinoma OMORI■Target projects■Key projects
200■Finalized projects■Track record
150

247

250

Support: Opening support and pharmacies
Departments: Internal medicine, pediatrics, ear, nose and throat, dental

 A new form of suburban SC launched by Mitsubishi Corporation
Urban Development (MCUD)
The first project in the machinoma series. A medical mall was
opened within machinoma OMORI in November 2018.
 In addition to four departments, it contains a Sogo Pharmacy
store, advisory services for medical-related issues, and a
support office for home-based aged care. This is the first timethat a form of “community-based healthcare mall,” which has
evolved from healthcare malls, was completed where healthcare
services are provided to residents in the community incollaboration with a neighboring university hospital.

100

75

77

94

109

58
2 170
110

50

0

March
31,2017March
31,2018

March
31,2019

April ,2019■Number of healthcare mallsby region (total: 110)

 Medical Garden Nagoya
 In response to the invitation oftenders by the Nagoya City
when they relocated andrenovated the City councilbuilding, we submitted a
successful tender jointly with amajor general contractor tobuild an ideal healthcare mall.
We aim to start the commercial
operation of Medical Garden
Nagoya in FY2022 to provide
medical care, aged care, health,prevention and life support.

*Current as of April, 2019
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21

Healthcare Mall Development（¥million）

25,000

Sales （all pharmacies）
Sales（existing pharmacies）*1
Prescription volume（all pharmacies）（in thousands）
Prescription volume（existing pharmacies）*1

3,000

2,743

(+12.5%) *2

2,609

2,600

18,0822,200(+7.0%) *2

20,000FY2018ActualNumber of pharmacies in healthcare malls

105

Total number of pharmacies

698

Ratio of healthcare mall pharmacies to all pharmacies

15.0%

2,438
19,004
17,489 17,489
15,000*2*2(+8.7%) (+3.4%)

1,800

FY2018Actual

10,0001,400

Number of prescriptions prepared by healthcare mallpharmacies (in 1,000)
Number of prescriptions prepared by all pharmacies (in5,000

FY2017 Actual

FY2018 Actual

1,000*1 Existing pharmacies = pharmacies that were opened in healthcare malls
before the end of FY2018.
*2 The figures in parentheses are comparison with FY2017

1,000)
Ratio of prescriptions prepared by healthcare mallpharmacies to total prescriptions

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

2,743
12,48722.0%

22Community-based Healthcare Vision Under the Act on Promotion of Comprehensive Medical and Aged Care Services, prefectures began
developing Community-based Healthcare Visions in April 2015. All prefectures prepared their visionby the end of FY2016.
*The Community-based Healthcare Vision is, in principle, developed for each unit of the secondary medical care zone.

 To facilitate the functional differentiation and collaboration of hospital beds, prefectures estimate andset medical care needs and the necessary number of hospital beds in 2025 for each medical carefunction in the Community-based Healthcare Vision.
 The Ministry of Health, Labour and Welfare prepared the Guidelines, including estimation methods,
when prefectures began developing the Community-based Healthcare Vision and released them inMarch 2015.
i
n
s
M
t
e
i
d
t
i
u
c
t
a
i
l
o
n
s

P
r
e
f
e
c
t
u
r
e
s

(Ward A)
Medical care for theadvanced and acute stage

Hard to see
their functions

Voluntarily
select the
medicalfunctionsthey perform(Ward B)
Medical care for the acutestage(Ward C)
Medical care for therecovery stage(Ward D)
Medical care for the chronic
stage

Report hospital
bed functions

Report the current status andfuture direction of their
medical functions (in Octoberevery year)

Develop a Community-based Healthcare Visionusing reports on medical functions and otherinformation and further facilitate functional
differentiation.

(Contents of a Community-based Healthcare Vision)
1. Medical demand and necessary number of hospital beds in2025
・Estimate medical demand and necessary number ofhospital beds
for each of the four functions (advanced and acute stage,
acutestage, recovery stage, and chronic stage)
・Estimate medical demand for home-based medical care,etc.
・Make estimates for each zone used for the Vision within
each
prefecture (basically, the secondary medical care zone)
2. Measures to build a medical care system we aspire to have
Example: facilities to promote the differentiation andcollaboration of medical functions, improvements to homebased medical care, etc. and securing and nurturing
healthcare practitioners

 The Liaison Committee on the Community-Based
Healthcare Vision will discuss and coordinate functional
differentiation and collaboration.

[Source] Ministry of Health, Labour and Welfare data
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Copyright Sogo Medical Co., Ltd All Rights Reserved.

23

Hospital Management Support
49■Target projects■Key projects■Track record

17
18

9

14

FY2017FY201815
6*Current as of March, 2019

FY2017FY2018

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

24

Topics: Restructuring of hospital beds—an example of support fortransition to a long-term medical care, rehabilitation, andaccommodation facility for the elderly (kaigo-iryou-in)

⽯川県

Support (1)Support (2)• Consulting service on hospital bed restructuring• Estimate business income and expenditure according to theschedule• Prior consultations and coordination with the local council• Interior renovation/turn rooms with multiple
beds into individual rooms• Introduce partitions• Purchase hospital room fixtures“Long-term medical care, rehabilitation, and accommodation facility for the elderly (kaigo-iryou-in)”Established in April 2018, the facility targets elderly people who have long-term medical and aged care needs. It fulfils medical functions such as daily
medical management and end-of-life and terminal care, and also functions as an accommodation facility.
 The system of assigning beds for elderly people requiring medical/aged care and/or rehabilitation (kaigo-ryouyou-byoushou) will be abolished as ofMarch 31, 2024 (transitory measures apply for six years).
 The calculation period for the additional payment to healthcare institutions (as an incentive for transition to a “long-term medical care, ehabilitation,
and accommodation facility for the elderly”) will end on March 31, 2021.
 Hospitals therefore need to become “long-term medical care, rehabilitation, and accommodation facilities for the elderly” (kaigo-iryou-in) no later thanMarch 31, 2020 to take advantage of the additional payment for a whole year.
Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Copyright Sogo Medical Co., Ltd All Rights Reserved.

25

Creation of High-value Pharmacies（Pharmacies）(in thousands)

900

13,114800

Number of pharmacies
Prescription volume

12,000700

10,000

600
8,000

500
400

6,000

300

4,000

200
2,000

100
0

0
03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 20/3
result goal
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Copyright Sogo Medical Co., Ltd All Rights Reserved.

26

Creation of High-Value Pharmacies: Growth Strategy
Quality improvement efforts
 Pharmacy openings through healthcare malls
There is scope for opening pharmacies throughhealthcare malls on the back of our history andtrack record in supporting doctors in opening
medical practices.

 M&A

Continue to proactively implement M&A basedon prudent assessment ahead of FY2020
revisions.

Café for dementia sufferers
As part of Fukuoka City’s dementia-friendly city
project, we opened Smile Café@Sogo as a café fordementia sufferers and their carers. We visit threecafes in Fukuoka City once a month to provide support
to dementia sufferers and their families.
We also train “dementia supporters” who canappropriately serve dementia sufferers visiting apharmacy. We actively promote efforts to help seniors
suffering from dementia.

Remote medication consultation service

92
25
FY2015FY20166

5FY2017FY2018

 Approach to existing medical institutions
Approach medical institutions that have not yet
separated the pharmacy segment in view of theconsumption tax hike.
Propose business succession and multiple
diagnosis system.

On March 27, we introduced our first remote
medication consultation service in the “Sogo
Pharmacy Higashiirube Store (Sawara-ku, Fukuokashi),” which is registered as a remote medication
consultation service in the Fukuoka City National
Strategic Special Zone.

Patient

Online consultation

Hirohashi
ClinicSogo
Pharmacy
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Copyright Sogo Medical Co., Ltd All Rights Reserved.

27

Creation of High-Value Pharmacies: Growth Strategy

The figures in brackets are the actual results of the previous period.

No. of pharmacies

128pharmacies

89pharmacies）(

891

研修終了薬剤師 891（pharmacist
名 （pharmacist）
641名）
641

Number of pharmacists who havecompleted training

Total
Health events at stores
Outreach-type health events

Number of
events
1,824
1,544
280

87pharmacists(69pharmacies）

No. of accredited health insurance covered
dispensing pharmacy pharmacists

Number ofparticipants
29,830⼈
8,072
21,75861,985cases 55,959(

cases）

1,245cases 438(

cases）

322cases

203cases）(

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

28

Creation of High-Value Pharmacies: Growth Strategy
Past recruitment of pharmacists

Strategic assignment of pharmacists（No. of people）

No. of pharmacists (left vertical axis)

3,000Actually hired (right vertical axis)

300• Shift to home-based medical care services• M&A• Assignment in view of various systems that grant
additional points- Development of primary care pharmacists- Additional points for pharmacists supporting
community-based medical care
• Create pharmacists with functions- Pharmacists collaborating with the community- Pharmacists collaborating with specialized medical
institutions

250

Development of human resources（No. of people）

2,899

400

2,660
2,520

350

2,500

2,087
2,000

1,911

200

1,500

150
1,000
100
500
50

0

2015/04

2016/04

2017/04

2018/04

2019/04

GOES aims to develop the abilities, skills, and mindsets thatpharmacists need to offer “medical services that Sogo
Pharmacies aim to offer.”
Based on the Gradable OJT Education System, pharmacists
will move through grades for their learning using “e-learning
tools” and “off-JT training” that includes practical training.
Medical services
that Sogo
Pharmacies aim
to offer0

GOESPractical
operation
Perform job
functionsStore
operation
Riskmanagement
Medication assessment

Medical knowledge; research andeducation
Communication

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

Laws,
regulations,systems29

Synergies with Bunkyo
1．Successful collaboration example (Bunkyoʼs business area: hospitals with about 150 beds)

Through their business promotion activities for rental TV, Sogo Medical finds out whether hospitals
are satisfied with their existing in-hospital stores and rental service of necessary items for hospitalstay.
We offer a combined deal that satisfies hospitals by making a joint proposal that includes rental TV,
stores, rental service for necessary items for hospital stay, and vending machines.

Make them happy!

Not happy with theMake them happy by
improving the quality andconvenience of in-hospital services

existing stores or rental
Medicalservice of necessary
institution items for hospital stayJoint
proposal

Needs

Sogo
MedicalRental TV
promotion
activities

Rental TV
Proposal andplanning

Find out
the needs

Jointly
receiveorders

Improved the convenience of in-hospital
services by consolidating the contact points forthe initial maintenance of TV systems, handlingof the rental service of necessary items for
hospital stay, and vending machines, to thestore in the hospital.

Respond to the hospitalʼs needs
Able to respond to the hospitalʼs needs forperipheral services which cannot be met
with rental TV promotion activities only
and able to consider responding to theconsulting needs in the future

RentalTV

Information
sharing
Ensure profitability

BunkyoDirectly operated
store and rental
service of necessary
items for hospital stay

Joint proposal andplanning

Directly operated store
and rental service ofnecessary items for
hospital stay
Vending machines

Concluded a combined deal that ensured
sufficient profitability by using Sogo
Medicalʼs business promotion resourcesand offering a set deal with Sogo Medicalʼsrental TV.

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

30

Synergies with Bunkyo
to develop business in the Kansai
2． Decision
region3．Large-scale projects

Began operating convenience stores and restaurants in key
hospitals in the Kyoto and Osaka regions in FY2019 toincrease synergies throughout all regional offices of Sogo
Medical.

An increasing number of core regional hospitals and large
hospitals are building an independent amenity wing when,for instance, they rebuild the main hospital building.
We will propose operating these amenity facilities as a
package based on Bunkyoʼs solutions and strengths inconvenient store and restaurant management.
Establish and operate an
independent amenity wing

Rebuild
thehospital

Decided to develop business in the
Kansai region from FY2019(Kyoto from April 2019; Osaka from July 2019)

Joint proposal
Sogo
Medical1 to 5 stores
6 to 10 stores
11 stores or more

• Management
consulting• Rental TV• Pharmacies

Bunkyoʼsstrengths

・Able to operate
convenience stores/kiosks
and restaurants together(Only a limited number of companies cando this)Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Copyright Sogo Medical Co., Ltd All Rights Reserved.

31

Overview of Luft Medical Care, Inc.

Acquisition of shares of a company running personnel service business (temporary staffing; service provision) andsterilization service business (inside and outside hospitals)(The company becomes a subsidiary on) May 27, 2019 (Scheduled)Company overview
Corporate philosophy “Fully support workplaces that protect lives”
Head office

10th Floor, Dai13 Daitetsu Bldg., 1-9-7
Shinjuku-ku, Tokyo

Business

Human resource service (temporary staffing, service provision)
Sterilization service (sterilization within and outside hospitals)
Seminars, etc.

Paid-in capital¥45 million

Established in

December 2002

Number of
employees

4,064 (as of January 2019)

Shareholders

Sogo Medical Holdings Co., Ltd. (100%)*Share assignment date: May 27, 2019

Key Points

July 31,
2016

July 31,
2017

July 31,
2018

FYE

In

Net assets¥million

896

1,094

1,289

Total assets¥million

2,081

2,631

3,518

Net assets per
share¥1,000

242

296

348

Sales

¥million

6,001

7,045

8,211

Operatingincome¥million

291

248

297

Ordinary income¥million

310

268

303

Net income¥million

197

199

195

Net income pershare¥1,00053

54

53• The company serves hospitals throughout Japan mainly through its temporary staffing service to dispatch assistant nursing staff andsterilization service. It is growing fast at an annual growth rate of 17%.
• The company has approximately 700 clients throughout Japan, including university hospitals and group hospitals. It particularly has
strengths in transactions with ultra-large hospitals with 400 or more beds.
• The company supports the creation of an environment that enables its doctors and nurses to better focus on providing medical treatment
through task shifting. It will make a great contribution in strengthening Sogo Medicalʼs functions as we work on providing support todoctors and medical institutions under the concept, “Good medical practice through good management.”• Combining the companyʼs strong business promotion ability to the nursing department and our services and consulting function, we willaddress workstyle reforms in the medical industry.
Existing

Transaction record●Major clients are hospitals throughout Japan Hospitals with 400 or more beds: Approx. 170 hospitals
 Hospitals with 200 or more and less than 400 beds: Approx. 230 hospitals
 Hospitals with less than 200 beds: Approx. 300 hospitals●Major clients
Tohoku Medical and Pharmaceutical University, The University of Tokyo Hospital,
St. Lukeʼs International Hospital, National Defense Medical College Hospital,
Kyushu University, Jichi Medical University Hospital, Juntendo University Hospital

Less than
200 beds

400 beds

clientsor more21%

200 beds or

Targetmore andhospitals

less than
400 beds

Clients are 700 hospitals
located all over Japan(as of March 31, 2019)21% of hospitals with 400 or more
beds are the companyʼs clients.
There is scope for future expansion.

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

32Collaboration with Luft Medical Care, Inc.
 Expand the product line-up for hospitals; strengthen support for the entire
hospital
Luft Medical Careʼsbusiness areas

Luft Medical Care
Convenience
stores/kiosks

Sterilization
business

Restaurants forvisitors; staff
canteens

Temporary staffing

Healthcare malls withseparate outpatient
clinics

Hospital clothing
rentalRental TV

Medical institution

Joint purchase

Dispensing
pharmacies
Management
supportSupport for
doctorsʼ careerchangeCopyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Copyright Sogo Medical Co., Ltd All Rights Reserved.

33

Business model
Corporate concept

Good Medical Practicethrough Good Management
Medical institutions like hospitals and clinics need goodmanagement to provide good medical care.
Providing good medical care from the outset, however,also results in good management.
erefore, good medical care and good management areboth essential to the provision of efficient,high-quality healthcare.
Doctors must have pride and a sense of mission to do
everything in their power for the patient they aretreating, and it is our mission to provide the institutional
support that enables doctors to focus on theimplementation of this good medical care.

Strengths
Sogo Medical is the only company that provides a diverse range of services including consulting, pharmacies, and leasing, as
a one-stop service provider.
With our consulting service as the basis, we use our total capabilities combining the medical practice support business (e.g.
consulting, rental, leasing and installment) and dispensing pharmacy business to support our clients. This is our basic
strategy and the key to differentiating us from other companies.
Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Copyright Sogo Medical Co., Ltd All Rights Reserved.

34

APPENDIX

4

Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Quarterly Earnings Trends (by Business)（\million）

FY2016

1Q
Sales

2Q

FY2017

3Q

4Q

1Q

2Q

FY2018

3Q

4Q

1Q

2Q

3Q

4Q

28,102 29,217 29,388 35,507 33,191 33,300 33,730 35,210

35,155 34,946

36,267 38,262

5,179

6,383

5,412

8,329

6,092

6,535

5,404

6,517

8,936

9,385

8,478 10,585

461

499

447

625

489

550

528

680

586

637

504

663

Rental

1,492

1,851

1,391

2,100

1,539

1,759

1,157

1,221

2,045

1,973

1,697

2,214

Leasing/installment

2,280

2,399

1,911

3,562

2,334

2,603

2,016

2,747

2,231

2,706

2,294

3,925

945

1,632

1,661

2,041

1,729

1,622

1,703

1,869

4,072

4,070

3,982

3,783

Medical practice support
Consulting

OthersPharmacies
Others

22,699 22,599 23,738 26,929 26,853 26,536 28,086 28,443
223

234

237

248

245

229

241

249

25,977 25,318
242

242

27,549 27,438
240

240

Cost of sales

24,026 24,969 24,746 30,019 28,492 28,270 28,675 29,640

30,001 29,422

30,595 31,897

Gross profit

4,076

4,247

4,641

5,488

4,699

5,030

5,055

5,570

5,154

5,524

5,671

6,366

SG&A

2,951

2,940

2,964

3,350

3,312

3,316

3,215

3,321

4,321

4,374

4,349

4,258

Operating income

1,125

1,307

1,677

2,137

1,387

1,714

1,839

2,249

832

1,151

1,322

2,106

Ordinary income

1,101

1,311

1,723

2,303

1,332

1,786

1,842

2,268

866

1,234

1,363

2,144

616

764

982

1,416

807

1,032

1,113

1,291

430

717

751

1,348

Quarterly profit attributable to owners of parent

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

36

Quarterly Earnings Trends (Data Summary)（\million）

FY2016FY2017FY2018

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

Consulting sales

461

499

447

625

489

550

528

680

586

637

504

663

Consulting

365

367

341

409

404

420

430

463

495

469

442

473

Practice transfer/start-up support

95

132

106

216

85

130

97

218

90

168

62

191

Practice transfer support

59
22
13

76
43
12

59
35
12

151
51
13

55
17
11

63
56
12

46
40
11

140
67
11

50
29
11

107
49
11

24
28
10

104
77
10

1,933

1,281

1,800

1,716

1,312

1,796

1,563

1,068

1,130

1,036

1,044

1,679

Practice transfer support (cases)

1,348

1,220

1,378

1,237

1,349

1,135

1,322

1,157

1,168

1,100

1,217

1,106

Full time

8
1,340

16
1,204

7
1,371

35
1,202

5
1,344

11
1,124

4
1,318

30
1,127

3
1,165

20
1,079

6
1,212

18
1,088

17

10

9

10

13

7

8

7

11

10

7

14

Rental sales

1,492

1,851

1,391

2,100

1,539

1,759

1,157

1,221

2,045

1,973

1,697

2,214

Sales of subrental
Rental

314
1,178

587
1,263

216
1,175

885
1,214

372
1,166

545
1,214

0
1,157

0
1,221

557
1,487

348
1,626

196
1,500

567
1,647

Leasing sales

2,280

2,399

1,911

3,562

2,334

2,603

2,016

2,747

2,231

2,706

2,294

3,925

Sales of sublease

1,764
330
184

1,911
330
157

1,389
318
202

2,709
326
525

1,683
307
342

1,985
293
326

1,528
294
193

1,946
321
481

1,626
361
243

2,092
613
0

1,518
151
626

2,677
451
797

578

580

672

674

677

687

689

687

691

689

693

698

4

3

95

3

4

11

3

0

4

0

7

6

2,544

2,508

2,712

3,050

3,010

2,929

3,135

3,202

3,067

2,933

3,231

3,256

Healthcare malls*

67

70

72

75

76

80

92

94

96

96

103

109

Number of management support cases*

5

5

5

5

6

7

8

9

10

10

11

14

Practice start-up support
DtoD-concierge advertising
No. of new doctor registrations for DtoD (people)(Number of doctors wishing to transfer/start-up aPart time
Support of medical practices carried on by successor

Leasing / Installment
Sales of medical equipment
Dispensing pharmacies (Pharmacies)*
New open
Number of prescriptions （thousands）

1Q

2Q

3Q

4Q

*Total for the end of the fiscal year

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

37

Medical Practice Support Data
FY2016FY2017FY2018

2,035
1,483

2,247
1,717

2,390
1,879

Practice transfer/start-up support

551

530

511

Practice transfer support

347

304

285

Practice start-up support

152

180

183

DtoD-concierge advertising

51

45

42

FY2016FY2017FY2018

253

179

185

46

35

42

5,183

4,963

4,591

Full time

66

50

47

Part time

5,117

4,913

4,544

FY2016FY2017FY201869,15974,89879,787

1,666

1,680

1,728

Total
Consulting

Start-up support
Number of cases to support medical practice
succession and opening of private practices

Practice transfer support

Doctors registered for DtoD

Succeed Members

FY2016 FY2017 FY2018
Total

6,836

5,676

7,929

Sales of subrental

2,003

917

1,668

Rentals

4,832

4,758

6,260

FY2016 FY2017 FY2018
Total

10,1539,700

11,156

Sales of sublease

7,774

7,142

7,913

Leasing/installment

1,308

1,215

1,576

Goods

1,070

1,342

1,666

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

38

Pharmacy Data
FY2016FY2017FY2016FY2018FY2017FY201895,966109,918

106,282

No. of pharmacies

674

687

698

94,467

107,919

104,247

No. of newly opened pharmacies

105

18

17

82,85692,292

100,954

Start-up support client portion

8

8

7

Pharmacies opened in FY2017

7,532

14,113

2,141

Existing client portion

5

4

5

Pharmacies opened/closed in FY2018

4,077

1,513

1,151

M&A portion

92

6

5

1,499

1,998

2,034

7

5

6

Prescription

Dispensing

Technical fee

unit pricefee unit priceunit price

(¥)

(¥)

(¥)

Pharmacies
Dispensing sales
Existing pharmacies

OTC sales

No. of pharmacies closed

FY2016
Dispensing

Technical fee

unit pricefee unit priceunit price

(¥)

(¥)

(¥)

10,814

8,735

6,519

2,216

9,536

8,688

-

-

Prescriptions(1,000)All pharmacies
Existing pharmacies

FY2017

Prescription

FY2018Prescription

Dispensing

Technical fee

unit pricefee unit priceunit price

(¥)

(¥)

(¥)

12,276

8,790

6,480

2,310

12,487

8,348

6,105

2,243

10,361

8,906

-

-

12,041

8,383

-

-

Prescriptions(1,000)Prescriptions(1,000)

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Copyright Sogo Medical Co., Ltd All Rights Reserved.

39

Pharmacies

Number of our pharmacies
全国薬局店舗数
in Japan

698(2019年3⽉末時点）（Current
as of 31 March, 2019）

東⽇本
Higashinihon

356

九州
Kyushu168

⻄⽇本Nishinihon

174
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Copyright Sogo Medical Co., Ltd All Rights Reserved.

40

Expanding Business Domains in Healthcare Adjacent
Businesses（Bunkyo activities）

TV rental
Consulting
Resources and goods
sales
Design andconstruction

Expand sales
channels to largescale hospitals

Hospitals with 400 or more
beds which Bunkyo does
business with・Achieve selection andfocus of sales resources
CVS and shops

Pharmacies/PB goods
CVS

Sogo Medical

BunkyoSogo Medical
healthcaremalls

Cafes &
vending
machines

Open CVS andcafes inhealthcare malls
・Provide added value tohealthcare malls
・Improve mall profit
margins

Restaurants
Cafes
Vending machines
Hospital gown
rental・Expand PB and goods sales
・Expand non-healthcare insurance related business

Patients and general consumers
Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Copyright Sogo Medical Co., Ltd All Rights Reserved.

41
41

Image of the Completed Japanese Healthcare Business
Model

Hospital Management Support

Ideal Healthcare Mall
Existing healthcare mall

Advanced acutecare hospital

Acute care
hospital

Treatment

Pharmacy

Nursing care

Residential life

Hospital bed
reorganization
Medical practice succession,
healthcare coordination,practice transfer support system
Rehabilitation
hospital

Chronic care
hospital

Daily life support

Healthcare & prevention(Source) Prepared by the Sogo Medical Group based on data released by the Ministry of Health, Labour and Welfare
Community-based Healthcare Vision○ Prefectures began developing Community-based Healthcare Visions in April 2015 under the Act on Promotion of Comprehensive
Medical and Aged Care Services.
○ To facilitate the functional differentiation and collaboration of hospital beds, prefectures estimate and set medical care needs andthe necessary number of hospital beds in 2025 for each medical care function under the Community-based Healthcare Vision.
Copyright SOGO MEDICAL HOLDINGS CO., LTD. All Rights Reserved.

Copyright Sogo Medical Co., Ltd All Rights Reserved.

42Securities code

9277

Contact

SOGO MEDICAL HOLDINGS CO., LTD.
Public Information and Investor Relations Division
Tel: +81-92-713-9181 Fax: +81-92-713-0185
E-mail: ir@sogo-medical.co.jp
These presentation materials have been released on the following web page:
URL : https://www.sogo-medical-hd.co.jp/