MEDICAL SYSTEM NETWORK Co., Ltd.
First Quarter of Fiscal Year Ending March 2024

Earnings Report
Prim Market of Tokyo Stock Exchange ; Securities Code: 4350

1

About contents covered* The contents of this report pertaining future earnings described are based on information
the company has held, and on certain assumptions supervising rational judgement, andare not what the company promises to achieve. There are numerous factors that may
cause actual earnings to differ. Caution is given to the accuracy of information, and we donot take responsibility for loss etc., as a result of misinformed information.

* Furthermore, this report is not prepared for the purposes of investment solicitation.

Readers are responsible for their own judgement in any decision regarding investments.

Please see the following link for our English information.

https://www.msnw.co.jp/eng/2

FY3/2024 1Q : Topics and Business Overview‐ vs Forecast ‐Figures in parentheses indicate changes from the end of the previous FY* YoY● Both of Net sales and profit exceeded the plan.
(Net sales +3.3%, Operating profit +157.2%)＜ Community Pharmacy Network Segment ＞

・ No. of prescriptions exceeded plan by +2.9%

Community Pharmacy

430 pharmacies（+2）

・ No. of Pharmaceutical network affiliates fell short of the plan, butordering volume of pharmaceutical increased compared to theplan.

Prescription Unit price(All pharmacies)

9,871 yen（-171 yen）*

No. of prescriptions (All pharmacies)

2,379K （+6.7%）*

No. of prescriptions (Existing pharmacies)

2,325K （+5.3%）*‐ YoY change ‐~ Our 3 Pharmacy Support Businesses ~● Increase in Net sales and profit(Net sales +5.2%, Operating profit +29.4%)
・ Although the unit price of prescriptions declined due to the NHI
pricerevision and the end of transitional measures for the Additional
Allowance related to Community Support System.
・ No of prescriptions filled increased due to the shift of COVID–19
to Class 5 of infectious diseases.

Pharmaceutical Network Business•No. of affiliates

9,172 affiliates （+260）

Manufacture and Market Pharmaceuticals Business•No. of ingredients46 ingredients（+1）•

No. of products

96 products（+3）•

No. of affiliates

3,642 affiliates（+727）*

Digital Shift Business•

No. User registrations

740K（+90K）•No. Installed pharmacies

3,797 pharmacies（+406)＜ Leasing and Facility related Segment ＞Wisteria•Occupancy rate of all 5 facilities

80.6%（+0.2%）

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Table of Contents

Earnings Highlight

・・・

5Business Summary・・・

11Core strategies, Earnings Forecast for
FY3/2024

・・・

224

1EarningsHighlight5

FY3/2024 1Q : Consolidated Results（Unit: million yen）

FY3/2023
1Q (results)

FY3/2024
1Q (plan)

FY3/2024
1Q (results)

YoY
ChangeChange (%)

FY3/2024
FY3/2024
1Q Progress rate Full year forecast

Net sales

26,29926,772

27,656+ 1,357+ 5.2%

103.3%EBITDA*¹

1,061－1,202Profit margin+ 140+ 13.3%

－

4.0%

Operating profit

348

175

451

1.3%

0.7%

+ 29.4%257.2%

2,600

Profit margin

+ 102

1.6%

Ordinary profit

392

147

410

1.5%

0.6%

+ 18

+ 4.6%

277.5%

2,550

Profit margin

1.5%

+ 57

+ 62.8%－1,000－－

Profit attributable toowners of parent
Profit margin

Earnings per share（Yen）

4.3%*²91(33)

0.3%

3.02

－148
0.5%

4.92

+ 1.90112,500
5,600
5.0%

2.3%

2.3%

0.9%

33.14

*1 Calculated as "Operating income + Depreciation and amortization + Amortization of goodwill*2 Includes 53 million yen in subsidy income related to online qualification verification

6

FY3/2024 1Q : Consolidated Financial Results - Quarterly■Net sales・Operating profit（Quarterly Trends）
・No of prescriptions filled increased in 1Q due to the shift of COVID–19 to Class 5 of infectious diseases.
・Operating profit in the first quarter usually tends to be low due to the impact of the revision of medical service
fees and seasonal factors.
Net sales（Unit: million yen）

Operating profit** Includes 202 million yenof inflation allowance paid7

FY3/2024 1Q : Results by Segment■ Net sales（Unit: million yen）

FY3/2023(results)

FY3/2024(results)

ChangeChange(%)

26,22927,656+ 1,357+ 5.2 %Community Pharmacy
Network Segment*¹

25,04526,356+ 1,311+ 5.2 %Other 3 Segments*²

1,444

1,468+ 24+ 1.7%

Adjustments

(190)

(168)

+ 22－348451+ 102

1.3 %

1.6 %

+ 0.3pt

1,014

1,077*³+ 63

4.1 %

4.1 %

+ 0.0pt

Net sales■ Operating profit（Unit: million yen）
Profit margin in brackets

Segment profit
Community Pharmacy
Network Segment*¹
Other 3 Segments*²(57)－Adjustments(608)－(0)*³－(626)－+ 29.4 %+ 6.2 %+ 56－－(17)－－*1 Community Pharmacy Business, Pharmaceutical Network Business, Manufacture and Market Pharmaceuticals Business, and Digital Shift Business*2 Leasing and Facility related Segment, Meal Catering Segment, Home Visit Nursing Segment*3 Transferring expenses related to the development of pharmacies from the Leasing and Equipment Related Business to the Community Pharmacy Businessfrom FY3/2024. The Impacted amount is minus 46 million yen.

8FY3/2024 1Q : Consolidated Balance Sheet■End of FY3/2023（Unit: million yen）

■End of FY3/2024 1Q（Unit: million yen）

Assets

66,223 Liabilities

51,735

Assets67,932 Liabilities

53,465Current assets

20,265 Current liabilities

21,349Current assets

21,445 Current liabilities

23,348Cash and deposits

8,141 Short-term loans*¹

6,168

Cash and deposits

9,751 Short-term loans*¹

6,703

Fixed liabilities

30,385

Fixed liabilities

30,117

Fixed assets

45,958 Long-term loans

20,226

Fixed assets

46,486 Long-term loans

19,003

Tangible fixed assets

27,060 Net assets

14,488

Tangible fixed assets

28,011 Net assets

14,467

Intangible fixed assets

11,807 Share capital

2,128

Intangible fixed assets

11,547 Share capital

2,128

Goodwill

11,183 Capital surplus

1,182

Goodwill

10,905 Capital surplus

1,182

Investments and otherassets

7,090 Retained earnings

11,606

Investments and otherassets

6,928 Retained earnings

11,571

Treasury shares(326)

Total liabilities andnet assets

66,223

Total assets

Equity ratio

21.8%

Equity ratio（Equity ratio with taking into account net cash*²24.9%)

Total assets

66,22367,932

Treasury shares(326)

Total liabilities andnet assets

67,932（Equity ratio with taking into account net cash*²

21.2%
24.8%)*1 Includes long-term loans that will be repaid within 1 year
*2 Own capital / (Total assets – Cash and deposits)

9FY3/2024 1Q : Consolidated Cash Flows
EBITDA*
Income taxes paid
Changes in working capital

1,202 million yen(613) million yen
1,791 million yen* Calculated by “operating profit + depreciation + amortization of goodwill”

Opening of new pharmaciesExisting pharmacies renovation costs, etc.

(203) million yen(115) million yen

Loan amount reduced(687) million yen

102BusinessSummary11

Community Pharmacy Business：
Trends in No. of Pharmacies
2 newoutlets since the end of the previous FY
ポイント〔Medical Mall〕

Hokkaido area

〔Located near medical institutions〕〔Nanohana Pharmacy
Gamo Station〕

Tohoku area

Tokai/Hokuriku
Chugoku/Shikoku〔Sakura PharmacyFukuma〕

FY3/2024 （As of June 30）

122
outlets

24
outlets

44
outlets

21
outlets
Kyushu64
outlets

Kanto/Koshinetsu
102outlets

Kinki

Fixed No. /results in 1Q

Full Year
PlanNo. ofopenings

11 / 215

No. ofprospects
connected toMedicalInstitutions

13 / 91053
outlets
As of June 30, 2023

■ Community pharmacy outlet no. trends of the past 10 years※

FY3/2026
midtermplan

FY3/2015

FY3/2016

FY3/2017

FY3/2018

FY3/2019

FY3/2020

FY3/2021

FY3/2022

FY3/2023

FY3/2024
1QOpenings

109885871282ー

Closing andtransferring

(13)

(8)

(4)

(5)

(14)

(15)

(13)

(6)

(7)

0ー

M&A27

720193036320ー

No. of outlets

345

353

377

399

420416416425428

430

550

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Community Pharmacy Business :Monthly Dispensing Fee（YoY)

2nd half total
all pharmacies +2.8%
existing pharmacies +0.4％

1Q total
all pharmacies +4.8%
existing pharmacies +3.3％
1st half total
all pharmacie +1.5%
existing pharmacies +0.1％

2022

2023

• Existing pharmacies definition: Pharmacies that have been continuously open since April 1, 2021 for the previous fiscal year and since April 1,2022 for the current fiscal year

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Community Pharmacy Business :Monthly Prescription Volume and Unit Price of Existing Pharmacies（YoY)
・ The unit price of prescriptions declined due to the NHI price revision and the end of transitional measures
for the Additional Allowance related to Community Support System.
・ No. of prescriptions filled increased due to the shift of COVID–19 to Class 5 of infectious diseases andrecovered to pre-COVID-19 levels.
2nd half total
Unit price (1.4%)
No. of prescription +1.8％

1st half total
Unit price (1.2%)
No. of prescription +1.3％

2022

1Q total
Unit price (1.9%)
No. of prescription +5.3％

2023

14Community Pharmacy Business : Dispensing Fee Breakdown
FY3/2023
1Q■ All pharmacies
No. of prescriptions (1,000)

Unit price(yen)FY3/2024
1Q

ChangeChange (%)

2,230

2,379+ 148+ 6.7%

Drug charge perprescription

7,620

7,526(94)(1.2%)

Technical fee perprescription

2,421

2,345(76)(3.2%)

10,0419,871(171)(1.7%)

22,39923,484+ 1,085+ 4.8%

2,209

2,325+ 116+ 5.3%

Drug charge perprescription

7,577

7,457(120)(1.6%)

Technical fee perprescription

2,425

2,354(71)(2.9%)

10,0029,810(191)(1.9%)

22,097

22,818+ 720+ 3.3%

Total
Dispensing fee (million yen)

■ Existing pharmacies
No. of prescriptions (1,000)

Unit price(yen)

Total
Dispensing fee (million yen)

*Dispensing fees are calculated based on the number of prescriptions x unit price of prescriptions

15

Community Pharmacy Business : Dispensing Fee Revision
・Although the weighted average number of points decreased from the end of the previous fiscal year
due to the end of the transitional measures for the Additional Allowance related to Community
Support System, the acquisition of points exceeded our original plan.
・We continue to focus on interpersonal services.

16

3 Pharmacy Support Businesses：
Performance Summary (as of June 30, 2023)
Supporting community pharmacies through 3 businesses:Our core Pharmaceutical Network,
Manufacture and Market Pharmaceuticals, and Digital Shift Initiative■ Progress against numerical targets for this fiscal year
Numerical Targets
for the Current Term

Pharmaceutical Network
Business

10,400 affiliates（+1,488 affiliates）

Progress（As of June 30）
9,172 affiliates+260 affiliates（From the end of the previous FY）
9,258 affiliates（As of July 31）

3,642 transaction pharmacies*+727 pharmacies（YoY）
Manufacture and Market
Pharmaceuticals Business

5,000 transaction pharmacies*（＋1,263 pharmacies）* No. of transaction pharmacies is total
pharmacies that have actually transacted
business since April of each year.

5,300 installed pharmacies（+1,909 pharmacies）

3,797 installed pharmacies+406 pharmacies（From the end of the previous FY）

1 million registered users（+360K users）

744K registered users+96K users（From the end of the previous FY）

Digital Shift Business17

Pharmaceuticals Network Business:
Performance Summary (as of June 30, 2023)
No. of new affiliates increased by 260 from the end of the previous FY to 9,172+1,488 forFY3/2024
targetIn the 1Q, many pharmacies took await-and-see attitude toward affiliation due
to the progress of price negotiations, etc.

18Manufacture and Market Pharmaceuticals Business：
96 products / 46 ingredients ( 3 products /1 ingredients were added from the end of the previous FY )・Although some orders have been suspended due to shipment adjustments, no. of new transaction pharmacies increased steadily.
✔ New transaction pharmacies +345
・Shipment adjustments will continue as needed , but shipments will be resumed as needed depending on inventory conditions, etc.
*No. of products adjusted for shipment as of June 30: 16 products / 6 ingredients ( End of March 2023：19 products / 7 ingredients)■ Net sales and No. of transaction
pharmacies■ Breakdown of sales plan for this fiscal year
4.2 billion yen

Release Date

Product name5,000 pharmacies

2.6 billion yen
1.8 billion yen
1.1 billion yen
1,134
pharmacies

1,682
pharmacies

3,642
pharmacies

①

2,915
pharmacies

0.66 billion yen

June 2023

Azilsartan OD tablet10mg/20mg/40mg「Feldsenf」

August 2023

olopatadine hydrochloride tablets
2.5mg/5mg「Fieldsend」

September 2023

4 products / 1 ingredients（plan）

products /ingredients

9 products /3 ingredients②April 2022 - March 2023 articles for sale11 products /4 ingredients③

Products released before March 2022

82 products /41 ingredients*No. of transaction pharmacies is total pharmacies that haveactually transacted business since April of each year.

19Digital Shift Business : 740K users registered
Official LINE Account・744K users have registered and 3,797 pharmacies have installed the service.
・Steady progress toward target of 1 million users registrations and 5,300 pharmacies in FY3/2024■ Online Medical Treatment Collaboration
Service linked with “Ishachoku”, an appointment-free online medical service
Complete the process online from clinic visit to medication pickup■ No. of users registrations andinstalled pharmacies

744K users

Pharmacy

online medical care
3,797
pharmacies

Patients"Tsunagaru
Pharmacy"

Pharmacy
Pharmacy*Target pharmacies will be expanded sequentially
2023/6■ Major Functional Updates■ Usage (single month)

Prescription
transmission
84K pieces

2023/6

Message
64K pieces（1）Customized Medical Questionnaire：Free content of questions for each pharmacy, promoting user registration（2）Notification delivery function：Easy distribution of information on promotion of use of prescription
services, OTC product information, etc.
（3）Medication history printout function：Responds to the need for written confirmation when collaborating withmultiple medical professions（4）Medication Follow Plus
：Supports target patient identification, scheduling and information distribution
20

Leasing and Facility related Segment
Wisteria Occupancy Rate Trends

All 5 buildings occupied：80.6％

・In 1Q, 16 new move-in and 15 move-out of Wisteria(End of FY 3/2024 target：
90% occupancy rate)

・Management income at managed properties remained steady.
・Transferring expenses related to the development of pharmacies from the Leasing and Equipment Related
Segment to the Community Pharmacy Business from FY3/2024. The impacted amount is minus 46 millionyen.
✔ Leasing and Facility related Segment
Net sales
800 million yen （YoY +0.7％）
Operating profit 22 million yen （Operating loss for the same period of the previous year
43 million yen）
213Core strategies,Earnings
Forecast for
FY3/2024【Republish】

22

FY3/2024: Core Strategies
Focused measures for the current period and Target value■CommunityPharmacy
Business

Acquisition of prescriptions using on-line tools (LINE, prescription transmission) tools
No. of existing pharmacies prescriptions :+1.9％(YoY)■

Strengthen interpersonal services and provide quality drug treatments■

Development of new 15 pharmacies, mainly in medical malls■

Increased productivity through appropriate cost controls■

10,400 affiliates at the end of March 2024 (+1,488 )■Promote distribution improvement; Our pharmacies Deliver once a day on weekdays, nodeliveries on Saturdays, and reduce urgent deliveries■

Core system renovation and renewal■

Expansion of services for affiliates

Manufacture andMarket
Pharmaceuticals
Business*■■

Stable supply
No. of transaction pharmacies including network affiliates : 5,000 (+1,263)

Digital ShiftBusiness*■■

No. of installed pharmacies : 5,300 (+1,909), 1 million user registrations (+360K)
Continued enhancements

Leasing and Facility relatedSegment■■

Achieved 90% occupancy rate and stable operation in Wisteria
Appropriate cost control and review of labor and advertising costs

Meal Catering Segment, HomeVisit Nursing Segment■

As the impact of Corona fades, returns to normal operations and raises break-even line

Investment and FinancialStrategies■■

IT investment in building area collaboration
Secure profit and build up capital through cost controlCommunity
Pharmacy
NetworkSegment* 3 Pharmacy
SupportBusinesses

Pharmaceuticals
NetworkBusiness*

23

RepubishEarnings Forecast for FY3/2024: Consolidated Forecast
Sales will increase while we expect earnings to decrease due to the termination of transitional measures
for the additional for Community support system premium and the impact of higher purchase prices
accompanying the NHI price revision(Unit: million yen)

FY3/23(Results)

FY3/24(Forecast)

Net sales

109,551

112,500

EBITDA

6,122
5.6 %

Operating profit
Profit margin

ChangeChange (%)+ 2,948+ 2.7 %

5,600(522)5.0 %(0.6 pt)(8.5 %)

3,163

2,600(563)

2.9 %

2.3 %(0.6pt)

Ordinary profit

3,355

2,550(805)Profit margin

3.1 %2.3 %(0.8 pt)

Profit attributable to owners ofparent

1,610

1,000(610)

1.5 %

0.9 %

(0.6 pt)

53.38

33.14(20.24)(17.8 %)

(24.0 %)

(37.9 %)

Profit margin

Earnings per share(Yen)－24Repubish

Earnings Forecast for FY3/2024: Forecast by Segment■ Net sales(Unit: million yen)

FY3/23

FY3/24(Results)(Forecast)

ChangeChange (%)

109,551

112,500+ 2,948+ 2.7 %Community Pharmacy
Network Segment*1

104,399

106,824+ 2,425+ 2.3 %Other 3 Segments*2

6,089

6,518+ 429+ 7.0%

Adjustments

(937)

(842)

+ 94

－Net sales■ Operating Profit(Unit: million yen)
Profit percentage in brackets

3,163

2.9 %

2,600

Community Pharmacy
Network Segment*1

5,887

5.6 %

4,977

Other 3 Segments*2(180)－220

Adjustments(2,542)－(2,597)

Segment profit

2.3 %(563)（0.6pt）(17.8 %)

4.7 %(910)（0.9pt）(15.5 %)

3.4 %+ 401

－－－

(55)

－－

※3

※3

*1 Community Pharmacy Business,3 Pharmacy Support Business(Pharmaceutical Network Division, Pharmaceutical Manufacturing and Sales Division, Digital Shift Division)*2 Leasing and Facility related Segment, Meal Catering Segment, Home Visit Nursing Segment*3 From FY2024, Development sales expenses is shifted from Leasing and Facility related Segment to Community Pharmacy Business Impact: minus 124 million yen25

MEDICAL SYSTEM NETWORK Co., Ltd.

[Contact us]
Corporate Management Divisionhttps://www.msnw.co.jp/eng/E-mail： info@msnw.co.jp

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