Note: This document is a translation of the original Japanese version and provided for reference purposes only. In theevent of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results
for the Three Months Ended June 30, 2022 (Japanese GAAP)
August 5, 2022

Company name:
Stock code:

Medical System Network Co., Ltd.
4350

Listing: Tokyo Stock Exchange
URL: https://www.msnw.co.jp/eng/

Representative:
Contact:
Tel:

Inao Tajiri, President and Representative Director
Eiji Hirashima, Executive Officer, Director of Finance and Director+81-11-613-7750

Scheduled date for quarterly report submission:
Scheduled date for dividend payment:
Preparation of supplemental explanatory materials:
Results briefing to be held:

August 9, 2022
－
Yes
None
(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Three Months Ended June 30, 2022
(April 1 to June 30, 2022)(1) Consolidated operating results
Net sales
Three months ended
June 30, 2022
Three months ended
June 30, 2021

EBITDA(Percentages indicate YoY change)
Profit attributable toOrdinary profit
owners of parent

Operating profit

Million yen%

Million yen% Million yen

26,2991.5

1,061(21.9)

25,914

3.0

1,359

106.5

%

Million yen%

Million yen%

348(47.7)

392(58.1)

91(84.4)

667

－

935

－

583

－

Note: Comprehensive income for the three months ended June 30, 2022 was 103 million yen ((84.8)% YoY), and comprehensive income for thethree months ended June 30, 2021 was 679 million yen ( －YoY).
Note: EBITDA = (operating profit + depreciation + goodwill amortization)

Earnings per share
Three months ended
June 30, 2022
Three months ended
June 30, 2021

Diluted earnings
per share

Yen

Yen

3.02

－

19.37

－

Note: Please refer to “Appropriate use of earnings forecast and other special notes 2” for details of earnings per share calculations.

(2) Consolidated financial position
Total assets
As ofJune 30, 2022
As ofMarch 31, 2022

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

64,964

13,17520.2

435.7962,941

13,28621.1

439.67

Reference: Shareholders’ equity amounted to 13,151 million yen as of June 30, 2022 and 13,268 million as of March 31, 2022.
Note: Please refer to “Appropriate use of earnings forecast and other special notes 2” for details of shareholders’ equity, equity ratio, and net
assets per share calculations.

2. Dividends
Dividends per share
End of Q1
Fiscal year ended
March 31, 2022
Fiscal year ending
March 31, 2023
Fiscal year ending
March 31, 2023 (forecast)End of Q2

End of Q3

Year-end

Total

Yen

Yen

Yen

Yen

Yen

－

5.00

－

7.00

12.00

6.00

－

6.00

12.00

－

Note: Revisions to the Company’s most recently announced dividend forecast: No

3. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2023
(April 1, 2022 to March 31, 2023)
Net sales

EBITDA
Million yen

Operating profit

Million yen%%

First half

53,4602.5

2,400 (26.2)

1,120 (39.9)

Full-year

110,000

3.1

6,200

3,500

(7.6)

Million yen

%

(9.1)

(Percentages indicate YoY change)
Profit attributable
Earnings
Ordinary profit
to owners ofper share
parentMillion yen%

Yen

1,260 (43.6)

590 (58.8)

19.55

3,700 (14.2)

1,750 (26.9)

57.99

Note: Revisions to the Company’s most recently announced consolidated earnings forecast: No
Note: EBITDA = (operating profit + depreciation + goodwill amortization)%

Million yen

*Notes(1) Changes in significant subsidiaries during the period under review: None
(Transfers of specified subsidiaries associated with changes in the Company’s scope of consolidation)
Newly added:
None
Excluded:None(2) Distinctive accounting methods applied when preparing quarterly consolidated financial statements: None
(3) Changes in accounting policies, accounting estimates and retrospective restatements
1. Accounting policy changes due to accounting standard revisions, etc.:
None
2. Other accounting policy changes:
None
3. Changes in accounting estimates:
None
4. Retrospective restatements:
None(4) Number of shares outstanding (common stock)
1. Shares outstanding(including treasury
As of June 30, 2022
stock)

30,642,600

As of March 31, 2022

30,642,600

2. Treasury shares
outstanding

As of June 30, 2022

464,055

As of March 31, 2022

464,055

3. Period-average shares
outstanding (cumulative
quarterly figures)

Three months ended
June 30, 2022

30,178,545

Three months ended
June 30, 2021

30,153,545

Note: Please refer to “Appropriate use of earnings forecast and other special notes 2” for details of calculation method regarding period-end
treasury stock numbers and period-average shares outstanding (cumulative quarterly figures).

*The financial information in this quarterly report is not subject to review by certified public accountants or auditing firms.
*Appropriate use of earnings forecast and other special notes
1. The earnings forecasts and other forward-looking statements contained in this document are based on information
currently available to the Company, and certain assumptions it considers reasonable, but are not intended to be a promisethat the Company will achieve. Actual results may vary materially from forecasts due to a variety of factors. For mattersconcerning earnings forecasts, please refer to page 3 of the attached materials “1. Qualitative Information on Quarterly
Financial Performance (3) Explanation of Consolidated Earnings Forecasts and Other Projections.”
2. In the quarterly consolidated balance sheets, the Company's shares held as trust assets of the Board Benefit Trust (BBT)
are recorded as treasury stock. They are included in treasury stock in calculations of earnings per share, equity ratio, net
assets per share, shareholders’ equity, period-end treasury stock numbers, and period-average shares outstanding(cumulative quarterly figures).

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Three Months Ended June 30, 2022

Accompanying Materials – Contents
1. Qualitative Information on Quarterly Financial Performance .................................................. 2(1) Explanation of Operating Results ........................................................................ 2(2) Explanation of Financial Position ......................................................................... 3(3) Explanation of Consolidated Earnings Forecasts and Other Projections ....................................... 3
2. Quarterly Consolidated Financial Statements and Primary Notes.............................................. 4(1) Consolidated Balance Sheet ............................................................................ 4(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ..................... 6(3) Notes to Quarterly Consolidated Financial Statements ...................................................... 8(Notes to going concern assumptions) ..................................................................... 8(Notes in the event of significant changes in shareholders’ equity) ............................................. 8(Segment information) ................................................................................... 8

1

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Three Months Ended June 30, 2022

1. Qualitative Information on Quarterly Financial Performance(1) Explanation of Operating Results
During the three months ended June 30, 2022, the Community Pharmacy Business was affected by a decline in theprescription unit price due to the impact of the NHI drug price and dispensing fee revisions implemented in April 2022,
but the opening of new stores and acquisition of stores contributed to earnings. In the Pharmaceutical Network Business,
the number of new network affiliates remained strong. As a result of these, the Company recorded net sales of 26,299
million yen (+1.5% YoY). On the profit side, the Community Pharmacy Business was weighed down by factors such as
the implementation of the NHI drug price and dispensing fee revisions and increased labor expenses accompanying
efforts to strengthen interpersonal services. As a result, the Company recorded operating profit of 348 million yen (47.7% YoY), ordinary profit of 392 million yen (-58.1% YoY), and profit attributable to owners of parent of 91 million yen(-84.4% YoY). Profit fell YoY despite sales growth, but it exceeded the initial forecast, resulting in a favorable outcome.
Results by segment were as follows. Net sales for individual segments include intersegment sales.
1) Community Pharmacy Network Segment
In the Community Pharmacy Network Segment, we aim to provide value throughout the entire pharmaceuticalsupply chain. Our businesses include community pharmacy operations, a pharmaceutical network to support
pharmacy management, pharmaceutical manufacture and marketing, and support services to transition generalpharmacies into family pharmacies using the LINE communication app.
In the Community Pharmacy Business, the prescription unit price fell due to the impact of the NHI drug price anddispensing fee revisions, but the opening of new stores and acquisition of stores contributed to earnings. These andother factors drove up the prescription count. During the three months ended June 30, 2022, we opened threecommunity pharmacies, including two inside medical malls (facilities that organize different medical departments on
single floors). As of June 30, 2022, the Company had 426 community pharmacies, one care plan center, and eight
drug/cosmetic stores.
In the Pharmaceutical Network Business, the number of new network affiliates continued to grow steadily amid
rising demand for business efficiency at pharmacies as pharmacists further concentrated on interpersonal work due
to the impact of dispensing fee revisions and other factors. As of June 30, 2022, pharmaceutical network affiliates
totaled 7,812, comprising 426 Group pharmacies and 7,386 general network affiliates (an increase of 411 from March
31, 2022).
In the Manufacture and Market Pharmaceuticals Business, we offered 82 products (41 ingredients) as of June 30,
2022. We supplied these to 1,732 general network affiliates (an increase of 34 from March 31, 2022), in addition toGroup pharmacies.
In the Digital Shift Business, the number of pharmacies using our service and those having placed orders grewsteadily, with the former reaching 1,549 as of June 30, 2022 (an increase of 638 from March 31, 2022) and the latter
2,194 (an increase of 551 from March 31, 2022).
As a result, segment sales for the three months ended June 30, 2022 were 25,045 million yen (+1.6% YoY), andoperating profit was 1,014 million yen (-15.6% YoY).
2) Leasing and Facility-related Segment
In the Leasing and Facility-related Segment, real estate lease revenue was generally solid, and orders forconstruction projects increased. As a result, segment sales were 794 million yen (+7.5% YoY). On the profit side, thesegment recorded an operating loss of 43 million yen (operating loss of 2 million yen in the same period of theprevious fiscal year) due to factors such as increased advertising expenses accompanying aggressive sales
promotion activities for the Wisteria serviced residences for the elderly and support services for physicians opening
their own practices.
As of June 30, 2022, Wisteria Senri-Chuo had an occupancy rate of 76.8% (63 out of 82 units occupied), andWisteria Minami-Ichijo an occupancy rate of 69.0% (80 out of 116 units occupied). The overall occupancy rate at thefive serviced residences for the elderly stood at 81.8%. Moving forward, we will continue to aggressively conduct2

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Three Months Ended June 30, 2022

sales activities that incorporate COVID-19 countermeasures in an effort to achieve our year-end occupancy target
rate of 90%.
3) Meal Catering Segment
In the Meal Catering Segment, the number of meals supplied declined mainly because the Company withdrew fromloss-making facilities. Segment sales were 573 million yen (-2.2% YoY), and the operating loss was 11 million yen(operating loss of 1 million yen in the same period of the previous fiscal year).
4) Other Segment
The Other Segment provides home-visit nursing care. Segment sales were 77 million yen (+3.2% YoY), and theoperating loss was 2 million yen (operating loss of 7 million yen in the same period of the previous fiscal year).

(2) Explanation of Financial Position
As of June 30, 2022, total assets amounted to 64,964 million yen, up 2,023 million yen from March 31, 2022.
Current assets totaled 19,392 million yen, up 690 million yen from March 31, 2022. The growth was mainly attributable
to an increase in merchandise.
Non-current assets were 45,572 million yen, up 1,332 million yen from March 31, 2022. The growth was primarily
driven by an increase in leased assets (net) included in “Other, net” under property, plant and equipment.
Meanwhile, liabilities came to 51,788 million yen, up 2,134 million yen from March 31, 2022. Current liabilities were21,146 million yen, up 710 million yen from March 31, 2022. This mainly reflected a decline in the provision for bonuses
and increases in accounts payable – trade and short-term borrowings. Non-current liabilities came to 30,642 million yen,
up 1,423 million yen from March 31, 2022. The growth was mainly driven by an increase in lease obligations included
in “Other” under non-current liabilities.
Net assets totaled 13,175 million yen, down 110 million yen from March 31, 2022 due mainly to a decline in retained
earnings resulting from the payment of the year-end dividend and other factors.

(3) Explanation of Consolidated Earnings Forecasts and Other Projections
The Company has made no changes to its first half and full-year earnings forecasts for the financial year ending
March 31, 2023, which were announced on May 6, 2022.

3

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Three Months Ended June 30, 2022

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet
Fiscal year ended
March 31, 2022
(as of March 31, 2022)
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Unearned revenue from sale of accounts
receivable
Purchased receivables - dispensing fees
Merchandise
Raw materials
Work in process
Supplies
Other
Allowance for doubtful accounts
Total current assets(Millions of yen)Three months ended
June 30, 2022
(as of June 30, 2022)

8,201
2,891

7,677
2,396

954

988

443
4,765
14
1
76
1,355
(3)

413
5,406
15
0
79
2,417
(2)

18,701

19,392

13,408
8,847
202
2,165

13,386
8,847
115
4,094

24,624

26,444

12,254401
111

11,971409
108

12,767

12,490

155
3,052
2,894
764
(19)

155
3,046
2,678
777
(19)

6,848

6,637

44,23945,572

62,94164,964Non-current assets
Property, plant and equipment
Buildings and structures, net
LandConstruction in progress
Other
Total property, plant and equipment
Intangible assets
Goodwill
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

4Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Three Months Ended June 30, 2022

(Millions of yen)Three months ended
June 30, 2022
(as of June 30, 2022)

Fiscal year ended
March 31, 2022
(as of March 31, 2022)
Liabilities
Current liabilities
Accounts payable – trade
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Provision for retirement benefits for directors(and other officers)
Provision for share awards for directors (andother officers)
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets

5

9,680
1,016
4,756
617
1,528

10,349
1,664
4,724
75
829

38

42

2,798

3,461

20,435

21,14622,891

21,714

600

610

210

219

3,752
1,763

3,840
4,257

29,21930,64249,65451,7882,128
1,182
10,393
(326)

2,128
1,182
10,270(326)

13,377

13,254

(7)

(7)

0
(102)

1
(97)

(108)

(103)

17

24

13,286

13,17562,94164,964

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Three Months Ended June 30, 2022

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income

Net sales
Cost of sales

Three months ended
June 30, 2021
(from April 1, 2021
to June 30, 2021)
25,914
15,175(Millions of yen)Three months ended
June 30, 2022
(from April 1, 2022
to June 30, 2022)
26,29915,236Gross profit

10,738

11,062

Selling, general and administrative expenses

10,071

10,713Operating profit

667

348

Non-operating income
Interest and dividend income
Outsourcing service income
Rental income from facilities
Subsidy income
Miscellaneous income

4
18
21
263
30

2
19
32
60
21

Total non-operating income

338

136

Loss on sale of receivables
Interest expenses
Miscellaneous losses

13
48
7

14
70
8

Total non-operating expenses

69

93

935

392

0

－

0

－

5
5

6
0

11

6

Profit before income taxes

925

385

Income taxes - current
Income taxes - deferred

35
308

213

Total income taxes

344

287

Profit581

97

Non-operating expenses

Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on store closings
Total extraordinary losses

74

Profit (loss) attributable to non-controlling interests(2)

6

Profit (loss) attributable to owners of parent

583

91

6

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Three Months Ended June 30, 2022

Consolidated Statement of Comprehensive Income

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income581(Millions of yen)Three months ended
June 30, 2022
(from April 1, 2022
to June 30, 2022)
97

95

(0)

(0)

1

3

4

98

5

Comprehensive income

679

103

(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

682

96

(2)

6

Three months ended
June 30, 2021
(from April 1, 2021
to June 30, 2021)

7

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Three Months Ended June 30, 2022

(3) Notes to Quarterly Consolidated Financial Statements(Notes to going concern assumptions)None to be reported.
(Notes in the event of significant changes in shareholders’ equity)
None to be reported.
(Segment information)
I. Three months ended June 30, 2021 (from April 1, 2021 to June 30, 2021)
Information on sales and profit (loss) by reporting segment
Reporting segment
Community Leasing andFacilityPharmacy
relatedNetwork

Meal
Catering

Other

Total

(Millions of yen)Amounts on
consolidated
Adjustments
statement of(Note 1)income(Note 2)

Net sales
Sales to externalcustomers
Intersegment sales ortransfers

24,657

596

586

74

25,914－25,914

0

143

－

－

143

(143)

－

Total

24,657

739

586

74

26,057(143)

25,914

Segment profit (loss)

1,202

(2)

(1)

(7)

1,191

(523)

667

Notes: 1. The negative 523 million yen adjustment to segment profit (loss) includes 63 million yen in elimination ofintersegment transactions and 587 million yen in companywide expenses not allocated to reporting segments.
Companywide expenses mainly refer to general expenses that do not belong to reporting segments.
2. Segment profit (loss) is adjusted with operating profit (loss) in the quarterly consolidated statement of income.
II. Three months ended June 30, 2022 (from April 1, 2022 to June 30, 2022)
Information on sales and profit (loss) by reporting segment
Reporting segment
Community Leasing andFacilityPharmacy
relatedNetwork

Meal
Catering

Other

Total

(Millions of yen)Amounts on
consolidated
Adjustments
statement of(Note 1)income(Note 2)

Net sales
Sales to externalcustomers
Intersegment sales ortransfers
Total
Segment profit (loss)

25,043

605

572

77

26,299－26,299

1

189

0

－

190

(190)

－

25,045

794

573

77

26,489(190)

26,299

1,014

(43)

(11)

(2)

957

(608)

348

Notes: 1. The negative 608 million yen adjustment to segment profit (loss) includes 62 million yen in elimination ofintersegment transactions and 671 million yen in companywide expenses not allocated to reporting segments.
Companywide expenses mainly refer to general expenses that do not belong to reporting segments.
2. Segment profit (loss) is adjusted with operating profit (loss) in the quarterly consolidated statement of income.

8