MEDICAL SYSTEM NETWORK Co., Ltd.
First Quarter of Fiscal Year Ending March 2021

Earnings Report

First Section of Tokyo Stock Exchange; Securities Code: 4350
MEDICAL SYSTEM NETWORK Co., Ltd. All Rights ReservedAbout contents covered※ The contents of this report pertaining future earnings described are based on
information the company has held, and on certain assumptions supervisingrational judgement, and are 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 do not take responsibility forloss 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/

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

2

Table of Contents

Earnings Highlight

・・・

４Topics

・・・

９Earnings Forecast for FY3/2021 andCore Strategies

・・・

１８

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved3

Earnings Highlight

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

4FY3/2021 1Q : Consolidated results
Earnings
Summary• Steady growth of network affiliates• Despite an increased ratio of longer-term prescriptions and rising unit price, we saw anoperating loss on a decrease in number of prescriptions and medical examinations (losswithin budget range).

Year-on-year

FY3/2020

FY3/2021

1Q

1Q

25,59925,162(436)(1.7%)

Operating profit

334(61)1.3%－－

1,150 〜 2,150Profit margin(396)

Ordinary profit

323(62)

1.3%－－

1,100 〜 2,100Profit margin(385)Profit attributableowners of parent

97(201)

0.4%－(298)－－

3.21(6.63)(9.84)－－

1,062658(404)(38.0%)－（Unit: million yen）

Net sales

Profit margin

Earnings per share
(Yen)
*1

EBITDA※

ChangeChange (%)

FY3/2021
Full year forecast*2

103,500 〜 105,500

1.1% 〜 2.0%

1.1% 〜 2.0%

*1 EBITDA is the calculated value of “operating profit + depreciation + amortization of goodwill”*2 Range used to account any influence from COVID-19
MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved5FY3/2021 1Q : Results in each segment part• Pharmaceuticals Network Business : Steady growth of network affiliates; significant decreasein number of prescriptions as a result of COVID-19

Earnings
Summary• Other 3 segments: Decrease in level of operating loss on improving profitability mix andincrease in occupancy at our Wisteria properties■Net sales

FY3/2020

FY3/2021

1Q

1Q（Unit: million yen）

Net sales
Community Pharmacy
Network Segment*1

Other 3 Segments*2（Unit: million yen）

Segment profit
Community Pharmacy
Network Segment*1

Other 3 Segments*2※Adjustments

Change (%)

25,59925,162(436)(1.7%)

24,22423,922(302)(1.2%)

1,529

1,386(142)(9.3%)

(154)

(146)

+8

Adjustments※■Operating profit

ChangeFY3/2020

ProfitFY3/2021

Profit1Q

margin1Q

marginChange－Change (%)

334

1.3%

(61)

－(396)

－－

825

3.4%

434

1.8%

(391)

(1.6 pt)

(43)

－(24)

－+18

－

－

(447)

－(472)

－

(24)

－－

(47.3%)*1 Pharmaceutical Network Business, Dispensing Pharmacy Business, Manufacture and Market Pharmaceuticals Business*2 Leasing and Facility related Business, Meal Catering Business, Home Visit Nursing Business
MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved6

FY3/2021 1Q : Consolidated balance sheet
Point

Assets: decrease in cash and deposits and goodwill
Liabilities and net assets: decrease in bonus provisions and retained earnings■End of FY3/2020（Unit: million yen）

■End of FY3/2021 1Q（Unit: million yen）

Assets

66,464 Liabilities

57,045

Assets65,440 Liabilities

56,406

Current assets

20,578 Current liabilities

23,296

Current assets

20,101 Current liabilities

23,822

Cash and deposits

11,722 Short-term loans*1

8,550

Cash and deposits

10,834 Short-term loans*1

10,219Fixed liabilities

33,74945,885 Long-term loans

27,601

25,126 Net assets

9,418

14,615 Capital stock

2,128

Goodwill

14,179 Capital surplus

1,183

Investments andother assets

6,143 Retained earnings

6,414

Fixed assets
Tangible fixedassets
Intangible fixedassets

Fixed liabilities

32,58445,339 Long-term loans

26,50024,973 Net assets

9,034

14,314 Capital stock

2,128

Goodwill

13,885 Capital surplus

1,182

Investments andother assets

6,051 Retained earnings

6,058

Fixed assets
Tangible fixed
assetsIntangible fixedassets

Treasury stock(206)

Total liabilities
and net assets

66,464

Total assets

Equity ratio

14.2%

Equity ratio

13.8%（Equity ratio with taking into account net cash*2*1 Includes long-term loans that will be repaid within the year
*2 Own capital/(Total assets – Cash and deposits)

17.2%)（Equity ratio with taking into account net cash*2

16.5%)

Total assets

66,46465,440MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

Treasury stock(225)

Total liabilities
and net assets

65,4407

FY3/2021 1Q : Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities(760)

million yen(408)

EBITDA*
Income taxes paid
Increasing working capital

658 million yen(520) million yen(631) million yen

Acquisition of buildings, etc.

(323) million yen

Loan amount reduced
Repayments of lease obligations
Cash dividends paid

568 million yen(98) million yen(147) million yen* Calculated by “operating profit + depreciation + amortization of goodwill”

million yen

291

million yen

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

8Topics

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

9Pharmaceuticals Network Business: Earnings summary(as of June 30, 2020)

Continuous steady growth in new network affiliates; increase of 372 from previous term
for a total of 5,617■Network aﬃliates (actual) （Unit: No. of network aﬃliates） ■Network aﬃliates (net increase)（Unit: No. of network aﬃliates）
2,000

8,000

6,000

3,790

4,000

2,00005,617

5,245

1,770

FY3/2017

1,500+1,281

1,000

FY3/2018

FY3/2019

FY3/2020

FY3/2021

0+1,455+739

2,509
500+1,200 for
FY3/2021
target+372+370+101
FY3/2017+214+106

FY3/2018

FY3/2019+328
FY3/2020

FY3/2021■Ordering volume of pharmaceuticals （Unit: one hundred million yen）
4,000

3,367

Full year

3,000

1Q

2,337
2,000

1,374

FY3/2021 1Q

1,691

998

1,000

0337

389510752

FY3/2017

FY3/2018

FY3/2019

FY3/2020

FY3/2021

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved10Pharmaceuticals Network Business:
Network affiliates distribution map (as of June 30, 2020)

5,589 network affiliates
as of August 3, 2020

* Temporary decrease due to withdrawal of affiliate group at the end of July 2020

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

11Dispensing Pharmacy Business: Trends in number of pharmacies
2 new outlets and 3 outlet closures/transfers since end of previous fiscal year
Hokkaido area

Outlets at
end ofFY3/2020
Outlets at end ofprevious termOpenings

end ofOutlets as ofFY3/2021

August 31Q

420416415

Chugoku/Shikokuarea

82－

21 outlets

Closings andtransferring

122outlets

Outlets atTohoku area

22 outlets

Kyushu area

(15)

(3)

(3)

M&A3－－Total

416415412

Kanto/Koshinetsu area

59 outlets

businesses

Kinki area

Tokai/Hokuriku
area

87 outlets

55 outlets 46 outlets

As of August 3■Dispensing pharmacy outlet number trends of the past 10 years*FY3/2021

FY3/2012

FY3/2013

FY3/2014

FY3/2015

FY3/2016

FY3/2017

FY3/2018

FY3/2019

FY3/2020

6211410988582

(3)

(8)

(7)

(13)

(8)

(4)(5)

(14)

(15)

(3)

M&A

63345277201930

3－

Number of outlets

223269

321

345

353

377

399420416

415

Openings
Closings and transferringof businesses

1Q*FY3/2012 was a six-month period owning to a change in the fiscal year end
MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

12Dispensing Pharmacy Business: Monthly dispensing fee（YoY)(Unit:%)

20.0

FY3/2020

15.8

13.6
9.4

10.0

10.1
11.1

9.4
5.1

6.4

2.2

0.0

7.7

7.4

2.8

5.7

FY3/2021

3.4

2.6

2.5
(0.2)

(0.3)

0.7

1.5

1.5(1.7)(10.0)

(7.7)
(8.6)

Dispensing fee of all pharmacies (YoY)
Dispensing fee of existing pharmacies (YoY)(20.0)
JulAug

Sep

Oct

Nov

Dec

JanFebMar

Apr

FY3/2020（unit:%）May

Jun

FY3/2021

FY3/2021

JulAug

Sep

Oct

Nov

Dec

JanFeb

Mar

Apr

May

Jun

1Q

13.6

9.4

15.8

6.4

7.4

10.1

2.6

7.7

3.4

(0.2)

(7.7)

2.5(1.8)

9.4

5.1

11.1

2.2

2.8

5.7

(0.3)

0.7

1.5(1.7)(8.6)

1.5(2.9)

Dispensing fee ofall pharmacies(YoY)
Dispensing fee ofexisting pharmacies(YoY)※ “Existing pharmacies” refer to pharmacies that continue to be in business on or after April 1, 2018 and April 1, 2019.
MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

13Dispensing Pharmacy Business: Comparison of monthly prescription
volume and unit price
Point--

Increase of unit price from higher volume of long-term prescriptions as aresult of COVID-19
Slow recovery in number of prescriptions in June

(Unit:%)All pharmacies
30.0
15.0
0.0

9.1

4.1

FY3/2020
12.8

11.2
4.6
4.1

4.65.0

4.8

1.3

2.5

6.8

7.6

3.1(4.6)▲15.0
Unit price (YoY)

FY3/2021
18.5

12.3

6.3

9.5

1.3(6.4)(8.3)(15.8)

Number of prescriptions (YoY)(17.8)

▲30.0
Jul

30.0
15.0
0.0

Aug

Sep

Existing pharmacies

5.4
3.8

5.7(0.6)

5.4

Oct

6.3

Nov

3.5

4.4(0.7)

1.2

5.4(3.8)▲15.0
Unit price (YoY)

Dec

Jan

7.5(6.0)

Feb

6.5

Mar
FY3/2020

12.9

AprMayFY3/2021

18.2
12.2(0.2)(9.9)

Number of prescriptions (YoY)

Jun

9.3

(7.1)
(16.8)(18.5)

AprMay▲30.0
JulAugSepOctNovDecJanFeb

Mar

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights ReservedJun14

Dispensing Pharmacy Business: Dispensing fee breakdown- Decrease in number of prescriptions as a result of COVID-19- Rise in unit price due to increase in long-term prescriptions

Point■All pharmacies
No. of prescriptions (1000) a
Drug charge per
Unit price(yen)prescription
Technical fee perprescription
Total bDispensing fee (million yen)
c=axb

■Existing pharmacies
No. of prescriptions (1000) aDrug charge per
Unit price(yen)prescription
Technical fee perprescription
Total bDispensing fee (million yen)
c=axb

FY3/2020

FY3/2021

1Q

1Q

2,267
7,377

1,964
8,564

Change(302)+1,187

Change(%)

【Prescription unit price trends 】（Unit: yen）

(13.4%)+16.1%

2,265

2,367+102+4.5%

9,642

10,931+1,289+13.4%

21,865

21,476

FY3/2020

FY3/2021

1Q

1Q

2,222
7,415

1,906
8,581

(389)

Change(315)+1,166(1.8%)
Change0

9,684

10,959+1,274+13.2%(2.9%)

9,642

Technical fee

10,931

8,564

Drug charge+1,187yen

2,265

2,367

Technical fee+102yen

FY3/2020 1Q

FY3/2021 1Q

7,377【Prescription unit price trends 】+15.7%+4.8%

Drug charge

3,000

9,000+108(625)

6,000(%)(14.2%)

2,378

20,8949,000（Unit: yen）

2,270

21,51912,00012,0006,000

Drug charge

9,684Technical fee

10,9598,581

Drug charge+1,166yen

2,270

2,378

Technical fee+108yen

FY3/2020 1Q

FY3/2021 1Q

7,415

3,0000* “Existing pharmacies” on this page refer to pharmacies continue to be in business on or after April 1, 2019.
MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved15

Dispensing Pharmacy Business:
Influence of the dispensing fee revision

Basic dispensing feeratio(points)
Pre-revision
Basic fee 142
Basic fee 226
Basic fee 3-b16
Special basic fee 11

FY3/2021 1Q

FY3/2021 plan(End of March 2020)(End of June 2020)（End of March 2021）

Results(Pre-revision)

Results(Post-revision)

Targetpremium ratio (points)
Post-revision
85% or higher 28
80% or higher 22
75% or higher 159points

9points
2outlets
0.5%11points
1outlets
0.2%16points
42points
203outlets 205outlets
Post-revision
48.9%
49.5%
Basic fee 14226points
Basic fee 2
26
6outlets
Basic fee 3-b
16
1.4%
Special basic fee 9

Generic drug dispensing

Pre-revision
85% or higher 26
80% or higher 22
75% or higher 18

FY3/2020 results

26points
6outlets
1.4%

0.7%
16points
42points
190outlets 215outlets
46.0%
52.1%

42points

47.6%

50.2%

26points
1.5%

Weighted average per prescription
30.0 points

Weighted average per prescription
30.4 points

0points
65outlets
15.7%
18points
26points
57outlets
175outlets
13.7%
42.2%

0points
60outlets
14.5%
15points
28points
61outlets
182outlets
14.8%
44.1%
22points
110outlets
26.6%

22points
118outlets
28.4%

16points

Weighted average per prescription
18.9 points

Weighted average per prescription
19.7 points

35points
157outlets
37.8%
0points
258outlets
41.2%

38points
170outlets
0points
243outlets 41.2%

Weighted average per prescription
15.7 points

Weighted average per prescription
18.0 points

Weighted average per prescription
30.2 points
0points

15points 13.1%
8.8%

28points
22points

52.4%

25.7%

Weighted average per prescription
21.2 points

Community support system
premium ratio (points)
Pre-revision

35

Post-revision
38

58.8%

0points
58.3%

38points
41.7%

Weighted average per prescription
18.3 points* Excludes suspended pharmacies ( FY03/2020 results includes pharmacies closed on March 31)

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

16

Manufacture and Market Pharmaceuticals Business: New generic drugs of 6components and 9 products for sale
(Unit : No. of
NW affiliates)

900600Trends in products &number of available locations
NW affiliates
products(Unit : No. ofproducts)60 products
707 NW affiliates

51 products
369 NW affiliates

90

As of end of June 2020
Available components ＆ products

29 components 60 products

6034 products
153 NW affiliates

300

30

(FY3/2022 target: 100 products)
Number of available locations

707 NW affiliates

On sale June 190

Mar/2019

Mar/2020

Jun/2020

0(FY3/2021 target: 1,000 NW affiliates)

Leasing and Facility related Business: Occupancy rate trends in Wisteria●96.9%（Wisteria N17）
●96.0%（Wisteria Kiyota）●92.6%（Wisteria Otaru Inaho）●81.7%（Wisteria Senri Chuo）

100%
80%●62.9%（Wisteria M1）

60%
40%

End of term target:20%0%

Over 90% in all facilities
Dec/2018

Mar/2019

Jun/2019

Sep/2019

Dec/2019

Mar/2020

Jun/2020

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

17Republish

Earnings Forecast for FY3/2021
and Core Strategies

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

18

FY3/2021: Core strategies

Republish

 Steadily promote business initiatives while handling COVID-19 related
challenges－ Will review quantitative goals of Fifth Mid-Term Management considering the wider COVID-19 impact
Summary: first 2 yearsPharmaceuticals
Network BusinessCommunity
Pharmacy
NetworkSegment

Dispensing
Pharmacy
Business

Manufacture andMarket
Pharmaceuticals
Business•

5,000 affiliates expansion achieved 2 years
earlier than anticipated•Core strategies this term

Increase 1,200 affiliates

Strengthened roadmap framework for “8items for streamlining distribution”

Make use of inventory management system; promotestreamline distribution•

Start of business efficiency projects

Stronger community pharmacy functions•

Digital medication history; stronger IT forautomated orderingCentralize on generic drugsIncrease productivity•Restructure of management in response tonotification 0402 from the Ministry of Health,
Labor and Welfare Secure prescriptions
 Improve profit•

Expanded lineup with bundle products

Expand sales to pharmaceutical network affiliates•

Improved occupancy rates for Wisteria Senri
Chuo and M1

Achieve 90% occupancy in all establishments; steadyoperation

Meal Catering Segment, HomeVisit Nursing Segment•

Base relocation and cost revisions

Steady balance of payments

Finance•

Responses to large investments

Implement measures to increase equity ratio to goalof 30%•Recognized as 2020 Certified Health &Productivity Management Outstanding
Organization in the “large organization”
categoryProjects according to SDGs; promote CSR activities

Leasing and facility relatedSegment

ESG/Health management

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved

19

FY3/2021: Earnings forecast (comparison to previous term) Republish■ Sales■ Operating profit
0100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
2,800
2,900
3,000
3,100
3,200
3,300

100,000101,000102,000103,000104,000105,000106,000107,000108,000

2020/3期実績
FY3/2020
results(Unit: million yen)

105,241

Pharmaceuticals
医薬品ネットワーク+ 695

Network Business

薬局Drug既存店薬剤料
charge at
薬局 既存店薬剤料（薬価改定の影響）
existing
pharmacies
Technicalfee at
薬局
既存店技術料
existing pharmacies
No. of prescriptions at
薬局
既存店処⽅箋枚数
existing
pharmacies▲ 3,567+ 2,769

その他
Other▲ 611

2021/3期
予想
FY3/2021(estimate)

+ 594

薬局
既存店薬価改定…
existing
pharmacies▲ 672+ 296

No. 既存店処⽅箋枚数
of prescriptions at
薬局
existing pharmacies+ 1,314

Effects of COVID-19
新型コロナ感染症(estimate)Pharmaceuticals
医薬品ネットワーク
Network BusinessTechnical fee at
薬局 既存店技術料
existing
pharmacies+ 296(Unit: million yen)

1,615

Drug charge atNewopening and前期M＆Ａ・開発
M&A pharmacies

Subtotal
上記⼩計

FY3/2020
results
2020/3期
実績

costs at
薬局 Labor
既存店労務費existing
pharmacies▲ 413

New前期M＆Ａ・開発
opening and M&A
pharmacies
Centralize
on generic
後発医薬品の絞込drugs+ 272

103,500〜105,500+ 687

その他
Other106,137

▲ 521

上記⼩計
Subtotal▲600〜▲2,600+ 893

2,751

Effects of COVID-19
新型コロナ感染症(estimate)▲600〜▲1,6002021/3期
予想
FY3/2021(estimate)

1,150 〜 2,150[Reference] Expecting definite effect on number ofprocessed prescriptions throughout
the year due to COVID-19(compared toprevious year)

FY3/2020 results

FY3/2021 estimate
Without COVID-19

With COVID-19

Number of prescriptions
at existing pharmacies

▲1.1%

＋3.3%

▲2.7％〜＋1.2%

Prescription unit price atexisting pharmacies

＋5.6%

▲3.7%

▲0.9％〜▲2.2%※ “Existing pharmacies” refer to pharmacies that continue to be in business on or after April 1, 2019.

MEDICAL SYSTEM NETWORK Co., Ltd. All Rights Reserved20

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

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E-mail︓ info@msnw.co.jp

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