Summary of Consolidated Financial Results for FY2018(Year ended March 31, 2019)〔Japanese GAAP〕
April 23, 2019
Company name:SOGO MEDICAL HOLDINGS CO., LTD.

Stock exchange listings:

Tokyo 1st Section

Securities code:

9277

Representative:(Title) Representative Director(Name) Kenji Sakamoto

Inquiries:(Title) General Manager, Finance and Accounting Department(Name) Osamu Inoue

Tel: +81-92-713-7091

E-mail: ir@sogo-medical.co.jp

URL: https://www.sogo-medical-hd.co.jp/en/index.html

Date of general shareholders’ meeting (as planned) : June 21, 2019
Dividend payable date (as planned) : June 24, 2019
Annual securities report filing date (as planned) :June 21, 2019
Supplemental material of annual results is available.
There will be a convening briefing of annual results for institutional investors and analysts.
(Amounts are rounded down.)

１．Consolidated Financial Results (from April 1, 2018 to March 31, 2019)（１）Consolidated operating results
Net sales
FY2018FY2017
Notes: Comprehensive income(% indicates year-on-year change.)
Profit attributable
Ordinary income
to owners of parent

Operating income

Millions of Yen%

Millions of Yen%

Millions of Yen%

Millions of Yen%

144,630

－
－

5,411

－
－

5,607

－
－

3,246

－
－

－

－

－

－

FY2018 ¥3,040 million (-%)
FY2017 ¥- million (-%)

FY2018FY2017

Net income toshareholders’equity ratio

Diluted net
incomeper share

Net income
per share

Ordinary income
to total assets
ratio

Operatingincome to net
sales ratio

Yen

Yen

%

%

%

108.47

－
－

8.7
－

6.1
－

3.7
－

－

References: Investment profit (loss) on equity method: ¥－for FY2018 :¥－for FY2017
Note: There are no year-on-year comparisons as Sogo Medical Holdings Co., Ltd. was established on October 1, 2018 following the transfer of equity in Sogo
Medical to the holding company.

（２）Consolidated financial positions
Total assets
FY2018FY2017

Capital adequacy
ratio

Net assets

Net assets per share

Millions of Yen

Millions of Yen%

Yen

93,56038,66941.0

1,281.82

－

－

－

－

References: Owner’s equity: ¥38,370 million for FY2018 :¥ - million for FY2017
Note: There are no year-on-year comparisons as Sogo Medical Holdings Co., Ltd. was established on October 1, 2018 following the transfer of equity in Sogo
Medical to the holding company.

（３）Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and equivalents,
end of period

Millions of Yen

Millions of Yen

Millions of Yen

Millions of Yen

3,852(6,624)(945)

10,733－－－－

FY2018FY2017

Note: There are no year-on-year comparisons as Sogo Medical Holdings Co., Ltd. was established on October 1, 2018 following the transfer of equity in Sogo
Medical to the holding company.

２．Dividends
Dividend per shareFirst quarter

FY2017FY2018FY2019(forecast)Second quarter

Third quarter

AnnualYear end

Yen

Yen

Yen

Yen

－
－
－

－
－

－
－
－

－

－

13.75
13.75

13.75
27.50

13.75

FY2017FY2018FY2019(forecast)

Ratio of total amount ofdividends to net assets(Consolidated)

Payout ratio(Consolidated)

Total dividend paid

YenMillions of Yen

%

%

－

－

－

411

12.7
22.4

1.1

Note: There are no results for the previous fiscal year and for the first two quarters of FY2018 (1H) as Sogo Medical Holdings Co., Ltd. was established on
October 1, 2018 following the transfer of equity in Sogo Medical to the holding company.

３．Consolidated forecasts for FY2019 (from April 1, 2019 to March 31, 2020)(% indicates year-on-year change.)

Net salesInterim
Full-year

Operating income

Profit attributable toowners of parent

Ordinary income

Net income
per share

Millions of Yen%

Millions of Yen%

Millions of Yen%

Millions of Yen%

Yen

78,161
165,313

－

2,166
6,367

－

2,236
6,510

－

1,261
3,672

－

42.12
122.67

14.3

17.6

16.1

13.1

４．Others（１）Material changes in subsidiaries during this period(Changes in scope of consolidations resulting from change is subsidiaries): None
（２）Changes in accounting policies and accounting estimates, retrospective restatement① Changes in accounting policies based on revisions of accounting standard: None
② Changes in accounting policies other than ones based on revisions of accounting standard : None
③ Changes in accounting estimates: None
④ Retrospective restatement: None
（３）Number of issued and outstanding shares (common stock）① Number of issued and outstanding shares
FY2018: 30,680,312sharesat the end of fiscal year (including treasury stock):② Number of treasury stock at the end of fiscal year:
FY2018: 745,545shares③ Average number of shares:
FY2018: 29,934,689shares

FY2017: －shares
FY2017: －shares
FY2017 : －shares

Note: There are no year-on-year comparisons as Sogo Medical Holdings Co., Ltd. was established on October 1, 2018 following the transfer of equity in Sogo Medical to theholding company.

(Reference）Summary of Non-consolidated Financial Results
１．Non-consolidated Financial Results (from April 1, 2018 to March 31, 2019)（１）Non-consolidated operating Results
Net sales
FY2018FY2017

Operating income(% indicates year-on-year change.)

Ordinary income

Net income

Millions of Yen%

Millions of Yen%

Millions of Yen%

Millions of Yen

%

1,137

－
－

618

－
－

624

－
－

626

－
－

－

Net income per share
FY2018FY2017－－－

Diluted net income
per share

Yen

Yen

20.92

－
－

－

Note: There are no year-on-year comparisons as Sogo Medical Holdings Co., Ltd. was established on October 1, 2018 following the transfer of equity inSogo Medical to the holding company.

（２）Non-consolidated financial positions
Total assets
FY2018FY2017

Net assets

Capital adequacy ratio

Net assets per share

Millions of Yen

Millions of Yen%

yen

32,73932,65399.7

1,090.84

－

－

－

－

References: Owner’s equity: ¥ 32,653 million for FY2018 :¥ － million for FY2017
Note: There are no year-on-year comparisons as Sogo Medical Holdings Co., Ltd. was established on October 1, 2018 following the transfer of equity in Sogo
Medical to the holding company.

※This summary of consolidated financial results is not subject to examination by a certified public accountant or audit by anauditing firm.
※ Notes for using forecasted information and others
1.
These forecasts are based on currently available information.Acrual financial results could differ from the forecast due to varipus
factors. For precautions on using the assumptions and estimates on which the financial results are based, please refer to “(4) Future
Prospects” on Page 8 of the Summary of Consolidated Financial Results (attached).
2.
The consolidated financial statements for this consolidated accounting period (April 1, 2018 to March 31, 2019) are prepared as acontinuation of the consolidated financial statements of Sogo Medical Co., Ltd., which has become a wholly-owned subsidiary bymeans of sole share transfer.

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

Contents
1. Operating Results ..............................................................................................................................2(1) Analysis of Operating Results .....................................................................................................2(2) Analysis of Financial Positions ...................................................................................................6(3) Cash flows ...................................................................................................................................7(4) Forecast for FY2019....................................................................................................................8
2. Basic Approach to Selection of Accounting Standards .....................................................................9
3. Consolidated Financial Statements .................................................................................................10(1) Consolidated Balance Sheet ......................................................................................................10(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income .......12(3) Consolidated Statements of Change in Net Assets ....................................................................14(4) Consolidated Statements of Cash Flows ...................................................................................15(5) Notes to Consolidated Financial Statements .............................................................................17(Note on the Going-Concern Assumption) .............................................................................17(Basic Information of Consolidated Financial Statements) ....................................................17(Segment Information) ............................................................................................................20(Per Share Information) ..........................................................................................................22(Significant Subsequent Events) .............................................................................................22

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SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

1. Operating Results
Sogo Medical Holdings Co., Ltd. (hereinafter, the “Company”) was founded on October 1, 2018as a pure holding company of Sogo Medical Co., Ltd. by means of a transfer of Sogo Medical Co.,
Ltd. shares. Given that the scope of consolidation has practically not changed, comparisons with theprevious period are made with the consolidated accounting period ended in March 2018 (April 1,2017 to March 31, 2018) of Sogo Medical Co., Ltd. In addition, comparisons with the figures as ofthe end of the previous consolidated accounting period are made with the figures of Sogo Medical
Co., Ltd. as of the end of the consolidated accounting period ended March 2018 (i.e., March 31,2018).
Consolidated financial statements for the consolidated accounting period under review (April 1,2018 to March 31, 2019) are prepared as a continuation of the consolidated financial statements ofSogo Medical Co., Ltd., which became the Company’s wholly-owned subsidiary following thetransfer of all of its outstanding shares to the Company.

(1) Analysis of Operating Results(in millions, except percentages)
FY2017

Sales

Margin¥ 135,431

Medical practice support

FY2018%¥ 144,630

MarginChange%Change¥ 9,199

6.8%

24,54837,384

12,835

52.3

Consulting

2,247

2,390

143

6.4

Rental

5,676

7,929

2,252

39.7

Leasing and Installment Sales

9,700

11,156

1,455

15.0

Others

6,923

15,907

8,983

129.8

Pharmacies

109,918

106,282(3,636)

(3.3)

964

964

0

0.1

OthersOperating Income

7,189

5.3

5,411

3.7

(1,777)(24.7)

884

3.6

995

2.7

111

12.6

Pharmacies

7,139

6.5

5,311

5.1

(1,828)(25.6)

Others

(22)

(2.3)

(1)

(0.1)

20

-

Reconciliation

(811)

-

(892)

-

(80)

-

Ordinary Income

7,228

5.3

5,607

3.9

(1,621)(22.4)

Profit attributable to owners of parent

4,243

3.1

3,246

2.2

(996)

(23.5)

Medical practice support

2

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

The business year ended March 2019 marked the second year of the Action 2020 medium-term
management plan. Based on the theme of the medium-term management plan, which is to realize aJapanese healthcare business model, we continued our efforts in developing healthcare malls,
supporting hospital management, and creating high-value pharmacies. In addition, we strengthened
the functions of the existing businesses and expanded our business domains to include peripheral
medical businesses to achieve the vision set for the 50th accounting period. By doing so, we aimed
to solidify the foundation for establishing a regional healthcare network.
In the accounting period under review, our sales grew 6.8% year on year to ¥144,630 million. This
reflects sales contributed by the incorporation of Bunkyo Co., Ltd. into the Sogo Medical Group in
the medical practice support business and higher revenues in consulting, rental, leasing, andinstallment sales businesses. These positive factors made up for smaller revenue in the pharmacy
business, which was negatively affected by the FY2018 revisions to standard drug dispensing feesand pharmaceutical prices.
As for profits, we worked on reducing the cost of sales and controlling SG&A expenses atappropriate levels. However, these efforts were not sufficient to absorb the impact of the downward
revisions to drug dispensing fees and pharmaceutical prices in the pharmacy business. As a result,operating income fell 24.7% year on year to ¥5,411 million, ordinary income shrank 22.4% year on
year to ¥5,607 million, and profit attributable to owners of the parent company slid 23.5% year on
year to ¥3,246 million.

Segment financial results were as follows:① Medical practice support
A. Consulting
Medical doctors registered with our doctor-to-doctor (DtoD) system (a support system for medical
doctors for succession planning of medical practices, healthcare collaboration, and career changes)
increased by 4,889 from March 31, 2018 to 79,787 as of the end of the accounting period underreview.
In the development of healthcare malls that can serve as a basis for helping local residents
continue their lives in their hometowns with peace of mind, the number of such malls developed byour company rose by 15 from March 31, 2018 to a total of 109 as of the end of the accounting period
under review.
Sales increased 6.4% year on year to ¥2,390 million, helped by larger consulting revenue from
hospitals/clinics than in the previous year and increases in rental revenue of healthcare malls andhospital facilities.

3

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

B. Rental
Sales rose 39.7% year on year to ¥7,929 million thanks to an increase in rental revenue resulting
from a rise in the number of TVs and other equipment installed.

C. Leasing / Installment
Sales increased 15.0% year on year to ¥11,156 million reflecting an 18.7% year-on-year growth in
the value of contracts concluded to ¥11,296 million on the back of new contracts resulting frommedical practice opening support and contracts for replacing medical equipment and devices.

D. Others
Bunkyo Co., Ltd., which operates shops and restaurants in hospitals, was incorporated into the
Sogo Medical Group on April 26, 2018 through a 100% equity transfer. The acquisition of Bunkyo
has made a significant contribution to “Other” businesses whose sales saw a 129.8% year-on-year
surge to ¥15,907 million.

As a result of the above, sales in the medical practice support business rose 52.3% year on year to¥37,384 million. Operating income in the segment also grew 12.6% year on year to ¥995 million
thanks to the contributions from the rental business and Bunkyo.

② Pharmacy
Under the theme, “create high-value pharmacies,” which is one of the priority policy measures in
the Action 2020 medium-term management plan, we promoted initiatives to create “general
healthcare stations” that were the choice of local communities.
In April 2018, the Japanese government revised standard drug dispensing fees and pharmaceuticalprices. Under the policy of establishing a comprehensive regional healthcare system, diversifying
and reinforcing medical service functions, and promoting collaboration of medical and healthcare
practitioners, the government’s latest revision requires pharmacies to promote so-called primary carepharmacists and to contribute to local healthcare services. In addition, the basic drug dispensing fee
was lowered for pharmacies that receive a high percentage of prescription orders from specificmedical institutions. This constitutes the government’s efforts to reassess pharmacies operating in theneighborhood of hospitals, and has delivered a severe blow to our group and the pharmacy chain we
operate.
Against this backdrop, the Sogo Medical Group is continuing its efforts to nurture specialist
pharmacists who can cater to advanced pharmaceutical management needs and to implement

4

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

measures to increase pharmacies participating in health support based on primary care pharmacists
and pharmacies.
In March 2019, we introduced our first remote drug dispensing consultation service in a National
Strategic Special Zone (Fukuoka City). We will continue enhancing the building of a home-based
medical care provision system and improving user convenience through this initiative, and at thesame time, provide a new value for the environment and medical services by helping users continue
to live in the familiar environment of their own house with a sense of security.
As a result of these efforts, the number of our pharmacies certified as health support pharmacists
reached 128 at the end of the period under review (the total number of applications received
nationwide was 1,275, and the number of certified pharmacies in our company group was 123 as ofFebruary 28, 2019). This is the result of the active promotion by the Sogo Medical Group to create
pharmacies that serve their local communities as general healthcare stations and to strengthen theirfunctions as local residents’ primary care pharmacies.

The number of dispensing pharmacies operated by our group rose to 698 following the opening of
17 outlets during the period under review. These include five outlets that became part of our groupthrough acquisition. With the opening of three outlets on April 1, 2019, the number of dispensing
pharmacies operated by our group has now exceeded 700.
Despite this achievement, however, sales in the pharmacy business shrank 3.3% year on year to¥106,282 million and the segment’s operating income contracted 25.6% year on year to ¥5,311
million partly due to the impact of the revisions to standard drug dispensing fees and pharmaceuticalprices.
③ Others
Sales rose 0.1% year on year to ¥964 million, while operating loss improved by ¥20 million fromthe previous period to ¥1 million.

5

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(2) Analysis of Financial Positions(in millions except percentages and ratios)
FY2017FY2018ChangeTotal Assets¥89,748¥93,560¥3,812

including Cash and Deposits

14,538

10,883(3,654)

Liabilities

53,221

54,8901,669

including Interest-Bearing Debt *1

23,52926,616

3,086

Net Assets

36,526

38,6692,143

Shareholders' Equity Ratio (%)

40.4

41.0

0.6

Net Debt-to-Equity Ratio (times) *2

0.25

0.41

0.16

*1. Interest-bearing liabilities include leasing liabilities, account payable-installment purchases, and so on, which are posted on thebalance sheet.
*2. Net Debt-to-Equity Ratio=( Interest-Bearing Debts－Cash and Deposits) / Shareholders' Equity

Total assets at the end of the period under review rose ¥3,812 million from March 31, 2018 to¥93,560 million. Total current assets shrank ¥384 million during the same period to ¥47,100 million,
mainly due to a ¥3,654-million decline in cash and deposits, a ¥1,474-million growth in installment
receivables, a ¥755-million rise in inventories, and a ¥602-million increase in notes and accounts
receivable-trade. On the other hand, total noncurrent assets increased ¥4,196 million to ¥46,460
million from March 31, 2018, primarily due to an increase of ¥2,513 million in goodwill and a¥1,338-million growth in for-lease assets.
Total liabilities rose ¥1,669 million from March 31, 2018 to ¥54,890 million. While current
liabilities contracted ¥1,008 million during the same period to ¥32,589 million chiefly due to a¥784-million reduction in income taxes payable and a ¥393-million drop in accrued expenses, total
noncurrent liabilities increased ¥2,677 million from March 31, 2018 to ¥22,300 million, mainly as aresult of a ¥1,961-million rise in long-term debts and a ¥335-million increase in long-term accounts
payable-installment purchases. Note that interest-bearing liabilities, including leasing liabilities andaccount payable-installment purchases, rose ¥3,086 million from March 31, 2018 to ¥26,616 million.
As a result, the debt-to-equity ratio, which is calculated by deducting cash and deposits frominterest-bearing liabilities and then dividing it by the shareholders’ equity, rose 0.16 basis points
compared with March 31, 2018 to 0.41 times.
Total net assets increased ¥2,143 million from March 31, 2018 to ¥38,669 million. This reflects anincrease of ¥3,246 million due to the booking of profit attributable to owners of the parent company
and a decrease of ¥898 million due to dividend payments.
As a result of the above, our capital adequacy ratio rose 0.6 basis points from March 31, 2018 to
41.0%.

6

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(3) Cash flows

Cash and cash equivalents (hereinafter, the “Funds”) as of the end of the period under review
shrank 25.7%, or ¥3,717 million, from March 31, 2018 to ¥10,733 million. This is mainly
attributable to the following.

(Cash Flows from Operating Activities)
Net cash provided by operating activities in the fiscal year under review was ¥3,852 million. The
main factors were ¥5,607 in income before income taxes and ¥3,893 million in depreciation andamortization, and ¥1,321 million in amortization of goodwill. Meanwhile, there was a ¥3,164 million
in expenditure for income tax payments.

(Cash Flows from Investing Activities)
Net cash used in investing activities in the fiscal year under review was ¥6,624 million. This isprincipally due to expenditure to acquire subsidiary shares following changes made to the scope of
consolidation (¥3,779 million), expenditure to acquire company assets (¥2,183 million), andexpenditure to acquire for-lease assets (¥1,483 million).

(Cash Flows from Financing Activities)
Net cash used in financing activities was ¥945 million. This reflects a reduction in the Funds
through the repayment of long-term debts (¥5,326 million), repayment of accounts
payable-installment purchases (¥1,268 million), and payment of dividends (¥898 million), among
other factors, partly offset by an increase in the Funds through long-term borrowings (¥7,200
million).

(Reference) Cash flow-Related Indicators
FY2014FY2015FY2016FY2017FY2018

37.7

39.5

37.6

40.4

41.0

69.8

76.6

72.3

100.9

54.2

Interest-bearing debt to cash flows (%)

2.8

2.6

2.2

2.2

6.9

Interest coverage ratio (times)

45.8

62.7

105.3

94.1

29.8

Capital adequacy ratio (%)
Capital adequacy ratio(based on fair value) (%)

Capital adequacy ratio: Shareholders’ equity / Total assets
Capital adequacy ratio (based on fair value): Market capitalization / Total assets
Interest-bearing debt to cash flows: Interest-bearing debt / Cash flows
Interest coverage ratio: Cash flows / Interest paid
(Notes) 1. Each ratio is calculated using consolidated amounts.
2. Market capitalization is calculated using outstanding shares less treasury stock.

7

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

3. Cash flows and interest paid are clarified as net cash provided by (used in) operating activities.
4. Interest-bearing debt is all debt for which interest is paid interest.

(4) Forecast for FY2019

FY2018FY2019(Forecasts)

Change(amount)

Change(%)

Millions of Yen

Millions of Yen

Millions of Yen%

144,630

165,313

20,682

14.3

Operating income

5,411

6,367

955

17.6

Ordinary income

5,607

6,510

903

16.1

Profit attributableto owners of parent

3,246

3,672

425

13.1

Net income per share (¥)

108.47122.67

14.20

13.1

Net sales

The business year ending March 2020 marks the final year of the Action 2020 medium-term
management plan.
Based on the theme of the medium-term management plan, which is to realize a Japanese
healthcare business model, we will continue our efforts in developing healthcare malls, supporting
hospital management, and creating high-value pharmacies. In addition, we will strengthen thefunctions of the existing businesses and expand our business domains to include peripheral medical
businesses to achieve the vision set for the 50th accounting period. By doing so, we aim to solidify
the foundation for establishing a regional healthcare network.
In the period ending March 2020, we forecast ¥53,480 million in sales in the medical practicesupport business (up 43.1% year on year), ¥110,836 million in sales in the pharmacy business (up4.3% year on year), ¥997 million in sales in “Others” (up 3.3% year on year), and total sales of¥165,313 million (up 14.3% year on year). These figures will be achieved through theimplementation of key measures under the medium-term management plan, organic growth ofbusiness companies centered on Sogo Medical Co., Ltd., synergies created through collaboration
among group companies such as Sogo Medical Co., Ltd., Bunkyo Co., Ltd., and
HOKENDOHJINSHA Inc., and strategic initiatives including the promotion of M&As.
As for profits, we forecast ¥6,367 million in operating income (up 17.6% year on year), ¥6,510
million in ordinary income (up 16.1% year on year) and ¥3,672 million in profit attributable toowners of the parent company (up 13.1% year on year) through the improved productivity achievedby efficient workstyles and the promotion of initiatives to control expenses at an appropriate level, in
addition to the aforementioned initiatives.
In terms of our corporate structure, we will further accelerate our efforts in strengthening the8

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

group management and strategy functions and business execution system, increasing strategic
partners, and developing next-generation leaders, which are the goals to be achieved under theholding company structure that we adopted in October 2018, in an effort to achieve the medium-term
management plan and the vision for the 50th accounting period at an early timing.
Note that the above forecasts factor in the impact of the “Announcement of the acquisition ofshares of Luft Medical Care, Inc. (as a subsidiary)” released on April 23, 2019.

2. Basic Approach to Selection of Accounting Standards
Since the business activities of Sogo Medical Group are currently limited to Japan, consolidated
financial statements are prepared according to Japanese accounting standards. However, Sogo
Medical will consider the implementation of International Financial Reporting Standards (IFRS)
taking into account a rising foreign shareholder percentage in the future as well as circumstances inJapan and internationally.

9

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

3. Consolidated Financial Statements(1) Consolidated Balance Sheet(in millions)
FY2018( As of March.31, 2019)

AssetsCurrent assets
Cash and deposits¥ 10,883

Notes and accounts receivable-trade21,138

Accounts receivable-installment sales

4,408

Lease investment assets

1,448

Inventories

6,542

Other

2,729

Allowance for doubtful accounts(51)

Total current assets

47,100Noncurrent assets
Property, plant and equipment
Property for lease, net

6,821

Buildings and structures, net

13,155

Land

4,662

Other, net

2,585

Total property, plant and equipment

27,225Intangible assets
Goodwill

11,633

Other

1,241

Total intangible assets

12,874

Investments and other assets
Investment securities

1,109

Deferred tax assets

1,285

Other

3,986

Allowance for doubtful accounts(21)

Total investments and other assets

6,360

Total noncurrent assets

46,460Total assets

93,56010

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(in millions)
FY2018( As of March.31, 2019)

Liabilities
Current liabilities
Notes and accounts payable-trade¥ 19,819

Short-term loans payable

133

Current portion of bonds

44

Current portion of long-term loans payable

5,112

Lease obligations

175

Accrued expenses

2,448

Income taxes payable

1,053

Deferred profit on installment sales

310

Other

3,491

Total current liabilities

32,589Noncurrent liabilities
Bonds payable215

Long-term loans payable

15,792

Lease obligations
Long-term
accounts payable-installment purchase

902
3,090

Other

2,299

Total noncurrent liabilities

22,300Total liabilities

54,890Net assets
Shareholders' equity
Capital stock

10,000Capital surplus

38

Retained earnings

29,819Treasury stock(1,878)

Total shareholders' equity

37,978

Accumulated other comprehensive income
Valuation difference on
available-for-sale securities

392

Total accumulated other comprehensive income392

Non-controlling interests

298

Total net assets

38,669Total liabilities and net assets

93,56011

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(in millions)
FY2018( As of March.31, 2019)

Net sales¥ 144,630

Cost of sales

121,915Gross profit

22,715

Selling, general and administrative expenses

17,303Operating income

5,411

Non-operating income
Dividends income

30

Rent income

22

Other

439

Total non-operating income

491

Non-operating expenses
Interest expenses

119

Other

177

Total non-operating expenses

296

Ordinary income

5,607

Income before income taxes

5,607

Income taxes-current

2,269

Income taxes-deferred

76

Total income taxes

2,346

Net income

3,260

Profit (loss) attributable to non-controlling interests

13

Profit (loss) attributable to owners of parent

3,246

12

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(Consolidated Statements of Comprehensive Income)(in millions)
FY2018( As of March.31, 2019)

Net income¥ 3,260

Other comprehensive income
Valuation difference on
available-for-sale securities(219)

Total other comprehensive income(219)

Comprehensive income

3,040

Comprehensive income attributable toComprehensive income attributable toowners of the parent

3,027

Comprehensive income attributable tonon-controlling interests

13

13

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(3) Consolidated Statements of Change in Net Assets
FY2018（from April 1, 2018 to March 31, 2019）(in millions)Shareholders' equity

Capital stock
Balance at the
beginning ofcurrent period

Capital surplus

Retained earnings

3,513

5,566

6,486

(5,528)

Total shareholders'equityTreasury stock

27,470(920)

35,629(958)-

Changes of
items during the period
Changes attributable totransfers of shares
Dividends from surplus

(898)

(898)

Profit attributable toowners of parent

3,246

3,246

Purchase oftreasury stock

(0)

(0)

Disposal of treasury
shares00

Net changes of items
other thanshareholders' equity
Total changes of items
during the period

6,486(5,528)

2,348

(958)

2,349

Balance at theend of current period

10,00038

29,819(1,878)37,978

Accumulated othercomprehensive income
Valuation difference on
available-for-sale securities
Balance at the
beginning ofcurrent period

Non controlling
Interest

611

285

Net assets

36,526

Changes of
items during the period
Changes attributable totransfers of shares-

Dividends from surplus(898)

Profit attributable toowners of parent

3,246

Purchase oftreasury stock(0)

Disposal of treasury
shares0

Net changes of items
other thanshareholders' equity

(219)

13

(206)

Total changes of items
during the period

(219)

13

2,143

Balance at theend of current period

392

298

38,66914

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(4) Consolidated Statements of Cash Flows(in millions)
FY2018( to March.31, 2019)

Net cash provided by (used in) operating activities
Income before income taxes¥5,607

Depreciation and amortization

3,893

Amortization of goodwill

1,321Interest and dividends income(34)

Capital cost and interest expenses

131

Decrease (increase) in notes andaccounts receivable-trade(370)

Decrease (increase) in
accounts receivable-installment(1,416)

Net decrease (increase) inlease investment assets(349)

Decrease (increase)in inventories
Increase (decrease) in notes andaccounts payable-trade

(306)
(544)

Other

(819)

Subtotal

7,111Interest and dividends income received

34

Interest expenses paid

(129)

Income taxes paid

(3,164)

Net cash provided by (used in) operating activities

3,852

Net cash provided by (used in) investing activities
Purchase of own-used assets(2,183)Purchase of property for lease(1,483)Purchase of investments in subsidiaries
resulting in change in scope of consolidation(3,779)

Other

821

Net cash provided by (used in) investing activities(6,624)15

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(in millions)
FY2018( to March.31, 2019)

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable¥ (372)

Redemption of bonds(44)

Proceeds from long-term loans payable

7,200

Repayment of long-term loans payable(5,326)

Repayments of lease obligations(235)

Repayments of installment payables(1,268)Cash dividends paid

(898)

Other

0

Net cash provided by (used in) financing activities(945)

Net increase (decrease) in cash and cash equivalents(3,717)

Cash and cash equivalents at beginning of period

14,450Cash and cash equivalents at end of period

10,73316

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(5) Notes to Consolidated Financial Statements(Note on the Going-Concern Assumption)
None.

(Basic Information of Consolidated Financial Statements)
1. Scope of Consolidation
Number of Consolidated Subsidiaries: 35 Companies(Major consolidated subsidiaries)
Sogo Medical Co., Ltd.
Hokendohjinsha Inc.
Bunkyo Co., Ltd.
Somtech Co., Ltd.
Sogo Medical Pharmacy Chubu Co., Ltd.
Aoba Pharmacy Co., Ltd.
Maeda & Co., Ltd.
Taikodo yakkyoku honten Co., Ltd.
Beauty Drug Saito Co., Ltd.
Shokando Co., Ltd.
Miyonodai Pharmacy Co. Ltd.
Motoki Pharmacy Co. Ltd.
Sun Villa Co., Ltd.

The following companies are included in the scope of consolidation from the consolidated
accounting period under review: K&K Pharmacy Co., Ltd. (whose entire outstanding shares wereacquired as of April 1, 2018), Bunkyo Co., Ltd. (whose entire outstanding shares were acquired as ofApril 26, 2018), Kikawada Yakuhin K.K. (whose entire outstanding shares were acquired as ofNovember 27, 2018), Triad Tokai Co., Ltd. (whose entire outstanding shares were acquired as ofDecember 21, 2018) and CRUXY Co., Ltd. (whose entire outstanding shares were acquired as ofMarch 1, 2019).
The following companies are removed from the scope of consolidation from the consolidated
accounting period under review: Nikki Co., Ltd. (which was merged with Trust Co., Ltd. as of April
1, 2018) and Kitano Dispensing Pharmacy Co., Ltd. (which was merged with Sogo Medical Co., Ltd.
as of November 1, 2018).

17

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

2. Equity-Method
None

3. Fiscal Periods of Consolidated Subsidiaries
Consolidated subsidiaries with fiscal-year ends different from that of the Company:
April 30 One other company in addition to Green Pharmacy Co. Ltd.
May 31 Ai Dispensing pharmacy Co., Ltd.
June 30 Four other company in addition to Pharma Systems Co., Ltd.
July 31 Two other company in addition to GM Co., Ltd.
August 31 One other company in addition to Miyonodai Pharmacy Co. Ltd.
September 30 Two other company in addition to Beauty Drug Saito Co., Ltd.

When preparing consolidated financial statements, financial statements as of March 31, 2019,are used for these companies.

4. Matters concerning accounting policy(1) Valuation basis and method of major assets①Investment Securities
With market value:
By the mark-to-market method based on average market value over a period of one month prior
to the date of settlement of the consolidated accounts (valuation differences are reported as aseparate component of net assets and the sale price is determined by the moving-averagemethod)Without market value:
At cost, using the moving-average method
Investments in a limited investment partnership or a similar partnership (that can be considered
as marketable securities in accordance with the Article 2 (2) of the Financial Instruments andExchange Act) are stated at their net equity value on the most recent financial statements thatare available on the settlement report day as specified in the partnership agreement.
② Inventories
Stated at historical cost mainly based on the weighted average method (Values on the balance
sheet are subject to the book value reduction method based on decreased profitability.)(2)Depreciation① Property for lease18

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

Depreciation is calculated by use of the straight-line method over each rental term of the assets.
② Plant, Property and Equipment and Intangible assets (Excluding rental assets, leased assets(lessee) and plant property and equipment related to pharmacies opened after April 1, 2012)

Depreciation for plant, property and equipment is calculated by use of the declining balancemethod. Depreciation for intangible assets is calculated by use of the straight-line method.
Useful lives of building and structures range from 10 to 47 years.
③Leased Assets (Lessee)
The straight-line method is applied for depreciation where the lease period is taken as useful
economic life and the residual value is zero.
Leased assets are classified as property, plant and equipment and intangible assets. Depreciation
is calculated by use of the straight-line method over each asset’s lease term of the assets andwith no estimated salvage value.
④Plant property and equipment related to pharmacies opened after April 1, 2012
Depreciation is calculated by use of the straight-line method.

(3)Allowance
Allowance for Doubtful Accounts
To provide for losses on doubtful accounts, allowances equal to the estimated amount of
uncollectible receivables are provided for general receivables based on the historical write-off
ratio, and bad receivables for each individual case.

(4)Revenue and Expense Recognition① Financing Leases (Lessor)
Standards for recording revenues related to financing leases
When the Company receives a lease payment, the Company recognizes the sale amount andcost of sale.
② Installment Sales
When the Company delivers a product through an installment contract, the Company
recognizes the full contract amount as accounts receivable-installment sales. When a due datearrives, the Company reports both the installment sale and the installment cost. Additionally,theCompany

recognizes

anunrealized

incomecorresponding

toaccounts

receivable-installment sales for which the due date has not arrived at year end as deferred profit
on installment sales.

19

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(5)Amortization of Goodwill Method and Period
Goodwill is amortized using the straight-line method over a period of no more than 20 years,
with the reasonable period being decided for individual items.

(6) Scope of Funds Used to Prepare Consolidated Cash Flow Statements
Funds used to prepare the consolidated cash flow statements (cash and cash equivalents)
include cash on hand, deposits withdrawable at immediate notice, and easily convertible
short-term investments redeemable within 3 months of acquisition with minimal risk offluctuations in value.

(7) Others
Consumption and Local Consumption Tax
The Company applies the tax exclusion method for consumption and local consumption tax.
The consumption tax amount not subject to tax credit related to property, plant and equipment
is classified as an investment and other assets. The other assets are depreciated using thestraight-line method over five years. The other consumption tax amount not subject to tax credit
is classified as a period expense.

(Segment Information)
1. Overview of Segments
Reportable segments are components of the Company for which separate financial information
is available. The Board of Directors regularly evaluates these segments to make decisions about
how to allocate resources and assess performance.
Our businesses consist of management consulting for medical institutions and medical doctors,
DtoD (support system for medical practice succession, medical cooperatives, and practitioner
recruitment), TV rental for patients in hospitals, leasing and installment payment sales of
medical equipment, design and construction of medical institutions, pharmacies, managing
fee-based residential homes for the elderly.
There are three reportable segments are now medical practice support, pharmacy and others toenable us to develop individual segment strategies and facilitate rapid decision-making aboutbusiness operations.

2. Information on sales, profit/loss, assets, and amounts of other items by reporting segment
The accounting method for reportable segments is similar to that described in the ‘Basic
Information of Consolidated Financial Statements’.

20

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018

Each segment profit (loss) is calculated based on operating income.
Intersegment sales and transfer pricing are calculated based on prices for transactions with third
parties.

3. Segment Sales, Profit (Loss), Assets, and Liabilities

FY2018 (from April 1, 2018 to March 31, 2019)(in millions)
Reportable Segments

consolidated
Reconciliations

Medical practiceamounts

Total
Pharmacies*1

Others*2

supportSales
Unaffiliated sales¥ 37,384¥ 106,282¥ 964¥ 144,630-¥ 144,630

Intersegment sales

6,572

1

12

6,585

¥ (6,585)

-

Total

43,956106,283976

151,216(6,585)

144,630

Segment profit

995

5,311

(1)

6,304

(892)

5,411

Segment assets

35,564

48,692

1,694

85,951

7,609

93,560

2,347

1,201

65

3,615

277

3,893

Impairment loss

216

1,104

0

1,321

-

1,321

Increase in assets

6,771

2,367

31

9,170

120

9,291

OthersDepreciation*1. Reconciliations were as follows:（1） Reconciliation for reportable segment loss (¥-892million) included elimination of intersegment sales(¥-57million) and overall corporate expense (¥-835million). The overall corporate expense was classified as
selling general and administrative expenses and was not allocated to reportable segments.
（2） The ¥7,609 million adjustment made to segment assets includes deposits of the head office and other items
that do not belong to any reporting segment.
（3） Assets included property, plant and equipment and intangible assets. Reconciliation of increase of those assets(¥120 million) was classified as head office’s networking systems and allocation of other reportablesegments.
*2. Reportable segment profits were reconsolidated with the operating income of the consolidated income statement.

21

SOGO MEDICAL HOLDINGS CO., LTD. (9277)
Summary of Consolidated Financial Results for FY2018(Per Share Information)
FY2018
Net assets per share¥ 1,281.82

Net income per share

108.47

Note: The following is the basis for the calculation of net assets per share.
(in millions)
FY2018
Net assets¥ 38,669

Deduction

298(Non-controlling interests)

298

Net assets attributable to common stocks

38,370

Number of common stocks at end of FY

29,934２ There is no mention of per-share net income after adjustment for residual shares as there are
no residual shares.
３ The following is the basis for the calculation of net income per share.

(in millions)
FY2018
Profit attributable to owners of parent¥ 3,246(Preferred dividends)-

Profit attributable to owners of parent
attributable to common stocks

3,246

Average number of common stocks

29,934(Significant Subsequent Events)
None.

22