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 Six Months Ended September 30, 2022 (Japanese GAAP)
November 4, 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:

November 8, 2022
December 12, 2022
Yes
Yes(for institutional investors and analysts)(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Six Months Ended September 30, 2022
(April 1 to September 30, 2022)(1) Consolidated operating results

Net sales
Six Months ended
September 30, 2022
Six Months ended
September 30, 2021

EBITDA

Operating profit

Million yen%

Million yen% Million yen

53,3402.2

2,537(22.0)

52,169

2.2

3,253

16.7

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

Million yen%

Million yen

%

1,099

(40.9)

1,242(44.4)

502(64.9)

1,862

37.4

2,235

60.0

1,431

147.2

Note: Comprehensive income for the six months ended September 30, 2022 was 523 million yen ((63.9)% YoY), and comprehensive income forthe six months ended September 30, 2021 was 1,451 million yen (+153.1% YoY)
Note: EBITDA = (operating profit + depreciation + goodwill amortization)

Earnings per share
Six Months ended
September 30, 2022
Six Months ended
September 30, 2021

Diluted earnings
per share

Yen

Yen

16.64

－

47.46

－

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 of
September 30, 2022
As ofMarch 31, 2022

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

64,124

13,59621.2

449.6062,941

13,28621.1

439.67

Reference: Shareholders’ equity amounted to 13,568 million yen as of September 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

Full-year

EBITDA

Operating profit

Million yen%

Million yen%

Million yen%

110,000

3.1

6,200

(7.6)

3,500

(9.1)

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

3,700 (14.2)

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

Million yen%

Yen

1,750 (26.9)

57.99

*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 September 30, 2022
stock)

30,642,600

As of March 31, 2022

30,642,600

2. Treasury shares
outstanding

As of September 30, 2022

464,055

As of March 31, 2022

464,055

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

Six months ended
September 30, 2022

30,178,545

Six months ended
September 30, 2021

30,163,381

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 Six Months Ended September 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) Consolidated Statement of Cash Flows .................................................................. 8(4) Notes to Quarterly Consolidated Financial Statements .................................................... 10(Notes to going concern assumptions) .................................................................. 10(Notes in the event of significant changes in shareholders’ equity) ........................................... 10(Segment information) ................................................................................ 101

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

1. Qualitative Information on Quarterly Financial Performance(1) Explanation of Operating Results
During the six months ended September 30, 2022, the Community Pharmacy Business was affected by a decline in
the prescription 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 53,340
million yen (+2.2% YoY). On the profit side, the Community Pharmacy Business was weighed down by factors such as
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 booked operating profit of 1,099 million yen (-40.9% YoY),
ordinary profit of 1,242 million yen (-44.4% YoY), and profit attributable to owners of parent of 502 million yen (-64.9%
YoY). Although sales were up and profits fell compared with the same period of the previous fiscal year, they weregenerally in line with the Company’s plan at the beginning of the year.
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 pharmaceutical supply
chain. Our businesses include community pharmacy operations, a pharmaceutical network to support pharmacy
management, pharmaceutical manufacture and marketing, and support services to help general pharmacies transition
into family pharmacies using the LINE communication app.
In the Community Pharmacy Business, although the prescription unit price fell due to the impact of the NHI drug priceand dispensing fee revisions, the prescription count rose on the back of the contribution of stores newly opened andacquired. During the first six months ended September 30, 2022, we opened four community pharmacies, including
three inside medical malls (facilities housing various medical clinics and departments). As of September 30, 2022, theCompany had 427 community pharmacies, one care plan center, and nine drug/cosmetic stores.
In the Pharmaceutical Network Business, the number of new network affiliates continued to grow steadily amid risingdemand for business efficiency at pharmacies as pharmacists further concentrated on interpersonal work due to theimpact of dispensing fee revisions and other factors. As of September 30, 2022, pharmaceutical network affiliates totaled
8,173, comprising 427 Group pharmacies and 7,746 general network affiliates (an increase of 772 from March 31, 2022).
In the Manufacture and Market Pharmaceuticals Business, we offered 85 products (42 ingredients) as of September
30, 2022. We supplied these to 1,886 general network affiliates (an increase of 188 from March 31, 2022), in addition
to Group pharmacies.
In the Digital Shift Business, the number of pharmacies using our service and those having placed orders grew steadily,with the former reaching 2,332 as of September 30, 2022 (an increase of 1,421 from March 31, 2022) and the latter
2,866 (an increase of 1,223 from March 31, 2022).
As a result, segment sales for the six months ended September 30, 2022 were 50,792 million yen (+2.3% YoY), andoperating profit was 2,384 million yen (-17.4% YoY).
2) Leasing and Facility-related Segment
In the Leasing and Facility-related Segment, real estate lease revenue was generally solid, and orders for construction
projects increased. As a result, segment sales were 1,673 million yen (+8.9% YoY). On the profit side, the segment
recorded an operating loss of 65 million yen (operating profit of 32 million yen in the same period of the previous fiscal
year) due to factors such as higher labor expenses resulting from an increase in the number of employees to strengthen
sales, and increased advertising expenses accompanying aggressive sales promotion activities for the Wisteria serviced
residences for the elderly and support services for physicians establishing their own practices.
As of September 30, 2022, Wisteria Senri-Chuo had an occupancy rate of 69.5% (57 out of 82 units occupied), andWisteria Minami-Ichijo an occupancy rate of 69.0% occupancy rate (80 out of 116 units occupied). The overall
occupancy rate at the five serviced residences for the elderly stood at 80.6%. Moving forward, we will continue toaggressively conduct sales activities that incorporate COVID-19 countermeasures in an effort to achieve our year-end

2Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Six Months Ended September 30, 2022

occupancy target rate of 90%.
3) Meal Catering Segment
In the Meal Catering Segment, the number of meals supplied declined due to the impact of COVID-19 and grossmargins fell due to higher purchase prices. Segment sales were 1,135 million yen (-2.7% YoY), and the operating loss
was 33 million yen (operating profit 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 151 million yen (-1.1% YoY), and theoperating loss was 10 million yen (operating loss of 12 million yen in the same period of the previous fiscal year).

(2) Explanation of Financial Position
As of September 30, 2022, total assets amounted to 64,124 million yen, up 1,182 million yen from March 31, 2022.
Current assets totaled 18,721 million yen, up 20 million yen from March 31, 2022. Non-current assets were 45,402
million yen, up 1,162 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, which offset a decrease in goodwill.
Liabilities came to 50,527 million yen, up 872 million yen from March 31, 2022. Current liabilities were 20,966 million
yen, up 530 million yen from March 31, 2022. This mainly reflected an increase in short-term borrowings. Non-current
liabilities totaled 29,561 million yen, up 342 million yen from March 31, 2022. The growth was mainly driven by an increasein lease obligations included in “Other” under non-current liabilities, which offset a decrease in long-term borrowings.
Net assets totaled 13,596 million yen, up 309 million yen from March 31, 2022, due mainly to an increase in retained
earnings.
(Status of Cash flows)
Cash and cash equivalents on a consolidated basis as of September 30, 2022 amounted to 6,743 million yen, down
1,427 million yen from March 31, 2022. The status of cash flows during the six months ended September 30, 2022 is
as follows.
(Cash flows from operating activities)
Net cash provided by operating activities totaled 1,701 million yen (versus 913 million yen provided in the same periodof the previous fiscal year). This was primarily due to inflows of 1,165 million yen in profit before income taxes and 872
million yen in depreciation.
(Cash flows from investing activities)
Net cash used in investing activities came to 902 million yen (versus 832 million yen used in the same period of theprevious fiscal year). The main factor was an outflow of 670 million yen in purchase of property, plant, and equipment.
(Cash flows from financing activities)
Net cash used in financing activities amounted to 2,226 million yen (versus 1,982 million yen used in the same periodof the previous fiscal year). This was mainly attributable to an outflow of 2,392 million yen in repayments of long-termborrowings.

(3) Explanation of Consolidated Earnings Forecasts and Other Projections
The Company has made no changes to the earnings forecast for the fiscal year ending March 31, 2023, which wasannounced on May 6, 2022.

3

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

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet(Millions of yen)Six months ended
September 30, 2022
(as of September 30, 2022)

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

8,201
2,891

6,774
3,328

954

981

443

431

Merchandise
Raw materials

4,765
14

5,220
16

Work in process
Supplies

1
76

3
75

Other
Allowance for doubtful accounts

1,355
(3)

1,901
(10)

Total current assets

18,701

18,721

Buildings and structures, net
Land13,408
8,847

13,257
8,901

Construction in progress
Other

202
2,165

151
3,998

Total property, plant and equipment

24,62426,307

12,254401

11,689496

Non-current assets
Property, plant and equipment

Intangible assets
Goodwill
Software
Other

111

106

12,767

12,292

Investment securities
Guarantee deposits

155
3,052

156
3,067

Deferred tax assets
Other

2,894
764

2,865
732

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(19)

(19)

Total investments and other assets

6,848

6,802

44,23945,402

62,94164,124

Total non-current assets
Total assets

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

(Millions of yen)Six months ended
September 30, 2022
(as of September 30, 2022)

Fiscal year ended
March 31, 2022
(as of March 31, 2022)
Liabilities
Current liabilities
Accounts payable – trade
Short-term borrowings

9,680
1,016

9,830
1,516

Current portion of long-term borrowings
Income taxes payable

4,756
617

4,662
603

Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Other

1,528

1,605

38

8

2,798

2,740

Total current liabilities

20,43520,966Long-term borrowings
Provision for retirement benefits for directors(and other officers)
Provision for share awards for directors (andother officers)
Retirement benefit liability

22,891

20,592

600

620

210

227

3,752

3,913

Other

1,763

4,207

Total non-current liabilities

29,21929,56149,65450,527

Share capital
Capital surplus

2,128
1,182

2,128
1,182

Retained earnings
Treasury shares

10,393(326)

10,681(326)

Total shareholders' equity

13,377

13,665

(7)

(6)

0
(102)

2
(92)

(108)

(97)

Non-current liabilities

Total liabilities
Net assets
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

17

28

13,286

13,596

62,94164,124

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

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

Net sales
Cost of sales

Six months ended
September 30, 2021
(from April 1, 2021
to September 30, 2021)
52,16930,307(Millions of yen)Six months ended
September 30, 2022
(from April 1, 2022
to September 30, 2022)
53,34031,024Gross profit

21,861

22,315

Selling, general and administrative expenses

19,99921,215

Operating profit

1,862

1,099

Non-operating income
Interest and dividend income

43Outsourcing service income
Rental income from facilities

37
52

35
71

Subsidy income
Miscellaneous income

366
59

176
38

Total non-operating income

520

325

Non-operating expenses
Loss on sale of receivables

27

27Interest expenses
Miscellaneous losses

95
24

138
16

Total non-operating expenses

146

182

2,235

1,242

Gain on sale of non-current assets
Gain on sale of investment securities

0
112

－

Total extraordinary income

113

7

Loss on sale of non-current assets
Loss on retirement of non-current assets

10
5

－
47

Impairment losses
Loss on store closings

90
5

18
13

Other

0

6

Ordinary profit
Extraordinary income

7

Extraordinary losses

112

85

Profit before income taxes

Total extraordinary losses

2,236

1,165

Income taxes - current
Income taxes - deferred

622
189

629
23

Total income taxes

812

653

1,424

512

(6)

10

1,431

502

ProfitProfit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent

6Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Six Months Ended September 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 income

Six months ended
September 30, 2021
(from April 1, 2021
to September 30, 2021)
1,424(Millions of yen)Six months ended
September 30, 2022
(from April 1, 2022
to September 30, 2022)
512

17

0

1

1

7

9

27

11

Comprehensive income

1,451

523

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

1,458

513

(6)

10

7

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

(3) Consolidated Statement of Cash Flows(Millions of yen)Six months ended
September 30, 2022
(from April 1, 2022
to September 30, 2022)

Six months ended
September 30, 2021
(from April 1, 2021
to September 30, 2021)
Cash flows from operating activities
Profit before income taxes

2,236

1,165

Depreciation
Impairment losses

827
90

872
18

Amortization of goodwill
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses for
directors (and other officers)
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for point cardcertificates
Increase (decrease) in provision for shareawards for directors (and other officers)
Increase (decrease) in provision for retirement
benefits for directors (and other officers)
Increase (decrease) in retirement benefit liability
Interest and dividend income

564
27

565
76

(65)

(30)

(0)

7

(2)

—

16

16

(217)

20

198
(4)

175
(3)

95
(112)

138
—

Loss (gain) on sale of non-current assets
Loss on retirement of non-current assets

9
5

(7)
47

Decrease (increase) in trade receivables
Decrease (increase) in unearned revenue fromsale of accounts receivable
Decrease (increase) in purchased receivables dispensing fees
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption
taxes
Other

(7)

(437)

16

(26)

24

11

(531)
1

(456)
150

45

(98)

Interest expenses
Loss (gain) on sale of investment securities

SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating
activities

8

(322)

205

2,893

2,410

4
(94)

2
(138)

(1,889)

(572)

913

1,701

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

(Millions of yen)Six months ended
September 30, 2022
(from April 1, 2022
to September 30, 2022)

Six months ended
September 30, 2021
(from April 1, 2021
to September 30, 2021)
Cash flows from investing activities
Payments into time deposits

(0)

(0)

Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Proceeds from sale of investment securities
Purchase of shares of subsidiaries resulting inchange in scope of consolidation
Proceeds from sale of businesses

(927)

(670)

19

22

(112)
379

(156)
—

(209)

—

11

—

Loan advances
Proceeds from collection of loans receivable

(1)
6

(0)
3

Payments of guarantee deposits
Proceeds from refund of guarantee deposits

(54)
18

(49)
30

Other

36

(81)

(832)

(902)

498
(2,195)500(2,392)

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings
Repayments of lease obligations
Dividends paid
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period

(134)
(152)

(120)
(213)

(1,982)(2,226)(1,902)(1,427)

10,088

8,171

Cash and cash equivalents at end of period

8,185

6,743

9

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

(4) 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. Six months ended September 30, 2021 (from April 1, 2021 to September 30, 2021)
Information on sales and profit (loss) by reporting segment
Reporting segment
Community Leasing andPharmacy
FacilityNetwork
relatedMeal
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

49,663

1,186

1,166

152

52,169－52,169

0

350

－

－

350

(350)

－

Total

49,663

1,536

1,166

152

52,519(350)

52,169Segment profit (loss)

2,885

32

1

(12)

2,906

(1,043)

1,862

Notes: 1. The negative 1,043 million yen adjustment to segment profit (loss) includes 117 million yen in elimination ofintersegment transactions and 1,161 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. Six months ended September 30, 2022 (from April 1, 2022 to September 30, 2022)
Information on sales and profit (loss) by reporting segment
Reporting segment
Community Leasing andPharmacy
FacilityNetwork
relatedMeal
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

50,785

1,268

1,134

151

53,340－53,340

7

404

0

－

412

(412)

－

Total

50,792

1,673

1,135

151

53,752(412)

53,340

Segment profit (loss)

2,384

(65)

(33)

(10)

2,275

(1,175)

1,099

Notes: 1. The negative 1,175 million yen adjustment to segment profit (loss) includes 145 million yen in elimination ofintersegment transactions and 1,321 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.

10