MEDICAL SYSTEM NETWORK Co., Ltd.
Third Quarter of Fiscal Year Ending March 2023

Earnings Report

Prime Market of Tokyo Stock Exchange ; Securities Code: 4350

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/

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FY3/2023 3Q : Topics and Business Overview
3rd Quarter Results
Profits decreased from the same period of the previous FY,
but mostly remained broadly in line with our forecast

Figures in parentheses indicate changes from the end of the previous FY‐ vs Forecast ‐＜ Community Pharmacy Network Segment ＞• Overall sales and profits were broadly in line with forecasts

Community Pharmacy
Prescription Unit price(All pharmacies)
No. of prescriptions (All pharmacies)
No. of prescriptions (Existing pharmacies)

Progress rate vs ForecastNet sales+0.1％

Operating profit +0.8％
Ordinary profit(0.4％)Net income(2.0％)‐ YoY change ‐•Net sales increased due to the contribution both of newly
opened community pharmacies and pharmacies acquired
through M&A
The steady growth in the number of new affiliates of thepharmaceutical network also contributed to Net sales
increasing Dispensing fees for all pharmacies +1.7% (YoY)•Profits decreased due to NHI price and dispensing fee
revisions, strengthening of interpersonal work atCommunity pharmacies, and an increase in labor costs in
Leasing and Facility related Businesses to strengthen
sales and marketing

429 pharmacies（+4）*
10,173 yen（-135 yen）*
6,828K （+3.1%）*
6,509K （+0.8%）* YoY~ The three pharmacy support businesses ~Pharmaceutical Network Business•No. of affiliates

8,555 affiliates （+1,154）

Manufacture and Market Pharmaceuticals Business•No. of ingredients
44 ingredients（+3）•No. of products
90 products（+8）•No. of affiliates

Digital Shift Business•
User registrations•
Order received pharmacies•
Installed pharmacies

2,042 affiliates（+344）

550K（+240K）
3,381 pharmacies（+1,738）
3,071 pharmacies（+2,160）＜ Leasing and Facility related Segment ＞
Wisteria•
Occupancy rate of all 5 facilities

81.8%（-1.5%）

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Table of Contents

Earnings Highlight・・・

5

Business Summary and Core Strategies

・・・

10

Earnings Forecast for FY3/2023

・・・

214

1EarningsHighlight5

FY3/2023 3Q : Consolidated Results
FY3/2022
3Q (results)

FY3/2023
3Q (results)（Unit: million yen）

Net sales

79,86881,878

EBITDA*1

5,173

4,525

6.5%

5.5%

3,063

2,344

3.8%

2.9%

Profit margin

Operating profit
Profit margin*2

Ordinary profit
Profit margin

3,485

2,499

4.4%

3.1%

2,144

1,195

2.7%

1.5%

71.08

39.60

YoY
ChangeChange (%)+ 2,009+ 2.5%(648)(12.5%)

Profit margin

(719)

6,200

74.4%
73.0%

(23.5%)

3,500

67.0%

3.2%

(985)

(28.3%)

3,700

67.5%

3.4%

(949)

(44.3%)

1,750

68.3%

1.6%

Earnings per share(Yen)

110,000Progressrate

5.6%

Profit attributable toowners of parent

FY3/2023
Full year forecast(31.48)－57.99－*1 EBITDA is the calculated value of “operating profit + depreciation + amortization of goodwill”*2 Includes 398 million yen in subsidy income for countermeasures against COVID-196

FY3/2023 3Q : Results by Segment■Net sales（Unit: million yen）

Net sales

FY3/2022
3Q (results)

YoY

FY3/2023
3Q (results)

ChangeChange(%)

79,86881,878+ 2,009+ 2.5%

75,98678,078+ 2,092+ 2.8%

Other 3 Segments

4,446

4,378(67)(1.5%)

Adjustments

(563)

(579)

(15)

3,063

2,344(719)

3.8%

2.9%

(0.9pt)4,663

4,299(364)

6.1%

5.5%

(0.6pt)50(167)

(218)

1.1%

－－

(1,650)(1,787)

(136)

－－

－

Community Pharmacy
Network Segment*1*2－■Operating profit(Unit: million yen)
Profit margin in brackets

Segment profit
Community Pharmacy
Network Segment*1*2

Other 3 Segments
Adjustments(23.5%)(7.8%)－－*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, and Home Visit Nursing Segment7FY3/2023 3Q : Consolidated Balance Sheet■End of FY3/2022（Unit: million yen）

■End of FY3/2023 3Q（Unit: million yen）

Assets62,941 Liabilities

49,654

Assets

68,520 Liabilities

54,395Current assets

18,701 Current liabilities

20,435Current assets

22,893 Current liabilities

24,341

Cash and deposits

8,201 Short-term loans*1

5,772

Cash and deposits

9,594 Short-term loans*1

7,535

Fixed liabilities

29,219Fixed liabilities

30,053Fixed assets

44,239 Long-term loans

22,891

Fixed assets

45,626 Long-term loans

20,441

Tangible fixed assets

24,624 Net assets

13,286

Tangible fixed assets

26,838 Net assets

14,125Intangible fixedassets

12,767 Capital stock

2,128

Intangible fixedassets

12,151 Capital stock

2,128

Goodwill

12,254 Capital surplus

1,182

Goodwill

11,527 Capital surplus

1,182

Investments andother assets

6,848 Retained earnings

10,393

Investments andother assets

6,636 Retained earnings

11,190Treasury stock(326)

Treasury stock(326)Total assets

62,941

Total liabilities andnet assets

Equity ratio*2（Equity ratio with taking into account net cash

68,520Total liabilities andnet assets

62,941

Total assets

21.1%

Equity ratio

24.2%)（Equity ratio with taking into account net cash

68,52020.6%*223.9%)*1 Includes long-term loans that will be repaid within the year
*2 Own capital / (Total assets – Cash and deposits)

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FY3/2023 3Q : Consolidated Cash Flows
Cash flows fromoperating activities

4,182
million yen

Cash flows frominvesting activities(1,547)
million yen

Cash flows from financing
activities(1,242)

EBITDA*
Income taxes paid
Changes in working capital

4,525 million yen(1,294) million yen
478 million yen* Calculated by “operating profit + depreciation + amortization of goodwill”

Opening of new pharmacies
Existing pharmaciesrenovation costs, etc.

(552) million yen(514) million yen

Loan amount reduced(687) million yen

million yen■FY3/2022 3Q（Unit: million yen）

■FY3/2023 3Q（Unit: million yen）

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2
Business
SummaryandCore Strategies

10FY3/2023 : Core Strategies

Republish

Core strategies and numerical targets for the current fiscal year
Community
Pharmacy
BusinessCommunity
Pharmacy
NetworkSegment

Pharmaceuticals *Network Business
Manufacture and*MarketPharmaceuticals
BusinessDigital Shift*Strengthening interpersonal work and provide quality drug treatment

Acquisition of prescriptions using on-line (LINE, prescription transmission) tools

Development of 15 pharmacies, mainly in medical malls

8,900 affiliates at the end of March 2023 (+1,499 YoY)

Building a system to reach 12,000 affiliates longer termFurther promotion of streamlined distribution

Expansion of services for affiliates

Expand clientele, primarily amongst our pharmaceutical network affiliates→ Target 2,700 at the end of March 2023 (+1,002 YoY）



Expansion of pharmacies with official LINE accounts→ Target Order received 4,400 (+2,757 YoY) / Installed 3,400(+2,489 YoY) at theend of March 2023

BusinessLeasing and facility related Segment

Achieve 90% occupancy ; steady operation

Meal Catering Segment, Home Visit
Nursing Segment

Safety-first operation

Steady balance of payments

FinanceSecuring profits through cost control

ESG/Health management

Projects according to SDGs; promote CSR activities* 3 Pharmacy Support Businesses
11Community Pharmacy Business :Trends in Number of Pharmacies
7 new outlets (1 from acquisition) and 3 outlet closures since the end of previous FY 〔Medical Mall〕
ポイント〔Medical Mall〕

Hokkaido area

〔Medical Mall〕

123
outlets〔Nanohana Pharmacy Toranomon 〕〔 Nanohana Pharmacy
Sagamihara Hoshigaoka〕〔Nanohana Pharmacy
Minamiibaraki Ekimae 〕〔Medical Mall〕
Tohoku area

Chugoku/Shikoku area

〔Located near medical institutions〕

24 outlets

21 outlets〔Medical Mall〕

Kyushu area
Kanto/Koshinetsu area

63 outlets〔 Nanohana Pharmacy Harima
Himeji Medical Center 〕

Kinki area

Tokai/Hokuriku area

54 outlets

44 outlets〔Nanohana Pharmacy
Magome Station〕

100 outlets〔Nanohana Pharmacy Awaza 〕■Community pharmacy outlet number trends of the past 10 years(as of December 31, 2022)

FY3/2014

FY3/2015

FY3/2016

FY3/2017

FY3/2018

FY3/2019

FY3/2020

FY3/2021

FY3/2022

FY3/2023
3Q

Openings

1410988587126

Closings and transferring ofbusinesses

(7)

(13)

(8)

(4)

(5)

(14)(15)

(13)

(6)

(3)

M&A

45277201930

3631

Number of outlets

321345

353

377

399

420

416416

425

429

12

Community Pharmacy Business :Monthly Dispensing Fee（YoY)

2nd half total
all pharmacies +2.5%
existing pharmacies +0.7％

1st half total
all pharmacies +3.7%
existing pharmacies +2.6％

2021

3Q total
all pharmacies +1.7%
existing pharmacies +0.0％

1st half total
all pharmacies +1.5%
existing pharmacies +0.0％

2022* Existing pharmacies definition : Pharmacies that have been continuously open since April 1, 2020 for the previous FY and since April 1,2021 for the current FY

13Community Pharmacy Business :Monthly Prescription Volume and Unit Price of Existing Pharmacies（YoY)
Despite an increase in the no. of prescriptions, the unit price of prescriptions declined due to the impact of therevision of dispensing fees

2nd half total
Unit price +0.2%
No. of prescription +0.5％

1st half total
Unit price (3.2%)
No. of prescription +5.9％

2021

3Q total
Unit price (0.7%)
No. of prescription +0.8％

1st half total
Unit price (1.2%)
No. of prescription +1.2％2022

14Community Pharmacy Business : Dispensing Fee Breakdown
FY3/2022
3Q■All pharmacies
No. of prescriptions (1,000)

Unit price(yen)Drug charge perprescription
Technical fee perprescription
Total

Dispensing fee (million yen)

FY3/2023
3Q

ChangeChange(%)

6,625

6,828+ 203+ 3.1%

7,882

7,733(149)(1.9%)

2,426

2,440+ 14+ 0.6%

10,30910,173(135)(1.3%)

68,29669,472+ 1,175+ 1.7%

6,459

6,509

+ 50+ 0.8%

7,871

7,769(102)(1.3%)

2,431

2,458+ 27+ 1.1%

10,30210,227(75)(0.7%)

66,542

66,570+ 28+ 0.0%

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

Unit price(yen)Drug charge perprescription
Technical fee perprescription
TotalDispensing fee (million yen)

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

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Community Pharmacy Business : Dispensing Fee Revision
Acquisition of dispensing fee is progressing as planned. We are continuing to focus oninterpersonal services

Basic dispensing fee ratio(points)
Pre-revission :Basic fee 1
Basic fee 2
Basic fee 3-b
Special basic fee

4226169

Post-revission :Basic fee 1
Basic fee 2
Basic fee 3-b
Basic fee 3-cSpecial basic fee

4226
1632
7

FY3/2022（End of Mar. 2022）

FY3/2023 3Q(End of Dec. 2022)

FY3/2023 plan（End of Mar. 2023）

Pre-revission Results

Post-revission Results

Target9points
5outlets
1.2%
16points
42points
178outlets 239outlets
41.9%
56.2%
26points
3outlets
0.7%

42points
5outlets
1.2%

42points
26points
1.2%
4outlets
0.9%
7points
7points
16points
2.1% 32points
6outlets
170outlets
32points
1.4%
56.1%39.7%
243outlets
56.8%

26points
0.9%
16points
39.7%

Weighted average per prescription Weighted average per prescription1 Weighted average per prescription
31.4 points
25.9 points
25.6 points

Generic drug dispensing premium ratio(points)
Pre-revission :85% or higher
80% or higher
75% or higher

28
2215

Post-revission :90% or higher
30
85% or higher
28
80% or higher
21

Community support system premium ratio(points)
Post-revission :Pre-revission :Community support
system premium
38

Additional fee for community
support system 139
Additional fee for community
support system 247
Additional fee for community
support system 3
17Additional fee for community
support system 4
390point
42outlets
15points 9.9%
45outlets
10.6%
28points
248outlets
58.3%
22points
90outlets
21.2%

0points
59outlets 30points
21points13.7% 106outlets
24.8%
79outlets
18.5%
28points
184outlets
43.0%

0point
15.3% 30points
22.1%
21points
22.5%
28points
40.1%

Weighted average per prescription Weighted average per prescription Weighted average per prescription
21.8 points
22.4 points
21.9 points
39points
39points
30outlets
8.2%
7.0％(additional0points（additional0pointfee 1)
38points
146outlets
fee 1）
0point199outlets
35.3%
34.1%
39points
47points
47points
226outlets 46.8%
11outlets
37.3%
163outlets
53.2%
39points
2.6％
38.1%
0.2% 17points
17points（additional(additional 19.0%
78outlets
fee 4）
18.2%
fee 4)
Weighted average per prescription Weighted average per prescription Weighted average per prescription
19.7 points
26.6 points
25.7 points* Excluding a pharmacy that is not consolidated

16Pharmaceuticals Network Business :Performance Summary (As of December 31, 2022)
Network affiliates remained steady, up 1,154 from the end of the previous FY to 8,555■ Full year

■ 3Q

■Network affiliates (actual)+1,499 for
FY3/2023
target■Network affiliates (net increase)（Unit: No. of network affiliates）（Unit: No. of network affiliates）

7,401

8,555

6,116+1,455+1,285+1,281

5,245+1,154+871

3,790887

FY3/2019

FY3/2020

FY3/2021

FY3/2022

FY3/2023
3Q■Ordering volume of pharmaceuticals（Unit : billion yen）

4,492
3,367

3,917

3,914

FY3/2019

FY3/2020

FY3/2021

FY3/2022

FY3/2023
3Q■FY3/2022 Breakdown of network aﬃliates(New/Withdrawal)
1Q

2Q

3Q

4Q

Total

New405

395

379

463

1,642

Withdrawal

(154)

(62)

(76)

(65)

(357)

2,337

■FY3/2023 Breakdown of network aﬃliates
1Q

FY3/2019

FY3/2020

FY3/2021

FY3/2022

FY3/2023
3Q

2Q

3Q

New

525

420

477

Withdrawal

(114)

(59)

(95)

17

Pharmaceuticals Network Business :Network Affiliates Distribution Map (as of December 31, 2022)
ポイント（Unit: No. of network affiliates ）TotalGeneral
MSNW
network
community
affiliates
pharmacies
8,126
429Total
8,555

8,670 network affiliates
as of January 31, 2023
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Manufacture and Market Pharmaceuticals Business /Leasing and Facility Related Business3 billion yen
planned for this FY

As of Dec. 31, 2022
Available products (ingredients) :1.8 billion yen
1.1 billion yen

369 affiliates

1.37 billion yen
1,698 affiliates

0.4 billion yen

1.97 billion yen

2,042 affiliates

1,116 affiliates

90 products (44 ingredients)(8 products (3 ingredients) added fromthe end of the previous FY)

Sales to general network affiliates :2,042 affiliates(End of FY 3/2023 target : 2,700 affiliates)

Occupancy rate trends in Wisterias (serviced elderly housing facilities)● 95.3%（Wisteria N17）100%

● 94.7%（Wisteria Kiyota）● 84.0%（Wisteria Otaru Inaho）

90%● 72.0%（Wisteria Senri Chuo）
80%● 71.6%（Wisteria M1）
All 5 facilities occupancy rate: 81.8%

70%
60%

Sep/2020 Dec/2020 Mar/2021 Jun/2021 Sep/2021 Dec/2021 Mar/2022 Jun/2022 Sep/2022 Dec/2022

End of FY 3/2023 target :90% occupancy rate19

Digital Shift Business : Exceeded 550K User Registrations
つながる薬局・ Exceeded 550K user registrations and 3K installed pharmacies in all 47 prefectures
・ Updated related functions with the start of electric (e)-prescription operation■ Function Updates■ Number of users registrations andorder received / installed pharmacies

60

Official LINE Account50*Figures in parentheses are
40YoY changes

550K users
5000（+120%）(1) Image transmission of "prescription details(copy)" when issuing e-prescriptions

3,381 4500
Order received
4000
pharmacies（+144%）: Utilizing the prescription transmission function forsending the exchange number to pharmacy

3500
3000

3020103,0712500
Installed
2000
pharmacies（+312%）
1500
1000
50000(2) Display status from the counterparty pharmacy on thee- prescription: Indicate whether or not e-prescriptions are acceptableby each pharmacy(3) Family pharmacy request: All functions are available upon patients request, even before
patients arrive at pharmacy(4) Online medication guidance reminders: Send a reminder message to both patients and pharmacy 30 minutes
before instruction notifications

・Deepened support for Pharmacy DX with enhanced features
related to e-prescriptions and online medication guidance・ Preparing linkage between e-medication record book and portalsite for Japanese “My-Number” social security numbers
20

3Earnings
Forecast for
FY3/2023

21

Earnings Forecast for FY3/2023 :Republish

Consolidated Forecasts

Although the number of pharmaceutical network affiliates is expected to grow steadily and the number ofprescriptions filled is expected to increase (Net sales will increase), Income is expected to decrease due to costprecedence from new store openings and dispensing fee revisions, etc.

(Unit: million yen)

FY3/22(results)

FY3/23(forecast)

ChangeChange (%)

Net sales106,685

110,000

EBITDA

6,708
6.3 %

Operating profit

3,852

3,500(352)Profit margin

3.6 %

3.2 %

(0.4 pt)*1+ 3,314+ 3.1 %

6,200(508)

5.6 %(0.7 pt.)(7.6 %)

Ordinary profit

4,313

3,700(613)

Profit margin

4.0 %

3.4 %

(0.6 pt.)

Profit attributable to owners ofparent
Profit margin

Earnings per share(Yen)

*2

2,394

1,750(644)

2.2 %

1.6 %

(0.6 pt.)

79.35

57.99(21.36)(9.1 %)(14.2 %)

(26.9 %)－*1 Includes 421 million yen in subsidy income for COVID-19*2 Includes 272 million yen increase due to one-time factors such as gain on sales of investment securities

22

Earnings Forecast for FY3/2023 :Republish

Forecasts by Segmen■Net sales(Unit: million yen)

FY3/22

FY3/23(results)(forecast)

ChangeChange (%)

106,685

110,000+ 3,314+ 3.1 %Community Pharmacy
Network Segment*1

101,457

104,701+ 3,244+ 3.2 %

Other 3 Segments*25,954

6,172+ 218+ 3.7%

Adjustments

(727)

(874)

(147)

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

Segment profit

Community Pharmacy
Network Segment*1

Other 3 Segments*2
Adjustments

FY3/22

FY3/23(results)(forecast)

ChangeChange (%)

3,852

3.6 %

3,500

3.2 %(352)（0.4 pt.）(9.1 %)

6,117

6.0 %

6,026

5.8 %(90)（0.2 pt.）(1.5 %)

28

0.5％

61

1.0 %+ 32+ 0.5 pt.

+114.1％(2,293)－(2,588)－(294)－－*1 Community Pharmacy Business, Pharmaceutical Network Business, Manufacture and Market Pharmaceuticals Business, Digital Shift Business*2 Leasing and Facility related Segment, Meal Catering Segment, Home Visit Nursing Segment

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MSNW group’s new company profile video now on view !
This video introduces the business activities of our groupin an easy-to-understand manner. Please take a look.

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MEDICAL SYSTEM NETWORK Co., Ltd.
https://www.msnw.co.jp/eng/MSNW

Search[Contact us]
Corporate Management Division
E-mail︓ info@msnw.co.jp

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