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 Nine Months Ended December 31, 2023 (Japanese GAAP)
February 6, 2024
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:

February 8, 2024
―
Yes
None
(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Nine Months Ended December 31, 2023
(April 1 to December 31, 2023)(1) Consolidated operating results

Net sales
Nine Months ended
December 31, 2023
Nine Months ended
December 31, 2022

EBITDA

Operating profit

Million yen%

Million yen% Million yen

86,175

5.2

5,406

19.5

81,8782.5

4,525(12.5)(Percentages indicate YoY change)
Profit attributable toOrdinary profit
owners of parent%

Million yen%

Million yen

%

3,069

30.9

3,044

21.8

1,693

41.7

2,344

(23.5)

2,499(28.3)

1,195(44.3)

Note: Comprehensive income for the nine months ended December 31, 2023 was 1,730 million yen (40.0% YoY), and comprehensive income forthe nine months ended December 31, 2022 was 1,235 million yen (-42.7% YoY)
Note: EBITDA = (operating profit + depreciation + goodwill amortization)

Earnings per share
Nine Months ended
December 31, 2023
Nine Months ended
December 31, 2022

Diluted earnings
per share

Yen

Yen

56.11

－

39.60

－

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 ofDecember 31, 2023
As ofMarch 31, 2023

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

67,503

15,60723.1

515.66

66,223

14,48821.8

478.86

Reference: Shareholders’ equity amounted to 15,561 million yen as of December 31, 2023 and 14,451 million as of March 31, 2023.
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, 2023
Fiscal year ending
March 31, 2024
Fiscal year ending
March 31, 2024 (forecast)End of Q2

End of Q3

Year-end

Total

Yen

Yen

Yen

Yen

Yen

－

6.00

－

6.00

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, 2024
(April 1, 2023 to March 31, 2024)
Net sales

Full-year

EBITDA

Operating profit

Million yen%

Million yen%

Million yen%

113,800

3.9

6,600

7.8

3,500

10.6

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

Million yen

%

Yen

3,450

2.8

1,650

2.4

54.67

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

*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 December 31, 2023
stock)

30,642,600

As of March 31, 2023

30,642,600

2. Treasury shares
outstanding

As of December 31, 2023

464,055

As of March 31, 2023

464,055

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

Nine months ended
December 31, 2023

30,178,545

Nine months ended
December 31, 2022

30,178,545

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 Nine Months Ended December 31, 2023

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 Nine Months Ended December 31, 2023

1. Qualitative Information on Quarterly Financial Performance(1) Explanation of Operating Results
In the nine months ended December 31, 2023, the Community Pharmacy Business saw a decline in the prescription
unit price as the transitional measures for community support system premiums came to an end. However, there wasan increase in the number of prescriptions filled. This rise can be attributed to diminished concerns over visiting hospitals
following the downgrading of COVID-19 to a Class 5 infectious disease, the outbreak of multiple respiratory infections,the utilization of digital technologies (including the use of the LINE instant messaging app for transmitting prescriptions),
and enhanced patient follow-up during medication periods. In the Pharmaceutical Network Business, net increase in thenumber of network affiliates fell short of expectations due to pharmacy closures and withdrawals resulting from M&A,
but the total value of pharmaceuticals orders placed by network affiliates was largely in line with projections, thanks toan increase in the value of pharmaceuticals procurement by existing affiliates. On the expense front, the Group as awhole worked to improve profitability and contain various costs. As a result, in the nine-month period under review, net
sales amounted to 86,175 million yen (+5.2% YoY), operating profit 3,069 million yen (+30.9% YoY), ordinary profit 3,044
million yen (+21.8% YoY), and profit attributable to owners of parent 1,693 million yen (+41.7% YoY).
Results by segment were as follows. Sales in each segment include intersegment sales.
From the first quarter of the fiscal year under review, the costs of the business development division, which werepreviously allocated to the Leasing and Facility-related Segment, have been transferred to the Community Pharmacy
Network Segment, as the division will focus on the development of the Company’s community pharmacies (the amounttransferred in the nine-month period under review was 110 million yen).
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, the prescription unit price fell as the transitional measures for community
support premiums came to an end, but the number of prescriptions filled increased. This uptick was due to reduced
concerns over visiting hospitals with the downgrading of COVID-19 to a Class 5 infectious disease, the outbreak ofmultiple respiratory infections, the utilization of digital technologies (including the use of LINE for prescription
transmission), and enhanced patient follow-up during medication periods. Further, in the nine-month period under review,
the Group opened nine new community pharmacies, including four in medical malls, and one drug store. It acquired
three community pharmacies through M&A, while closing or transferring four. As of December 31, 2023, the Group had
436 community pharmacies, one in-home care plan support center, and 10 drug/cosmetics stores.
In the Pharmacy Network Business, net increase in the number of network affiliates fell short of expectations due topharmacy closures and withdrawals resulting from M&A. However, the total value of pharmaceuticals orders placed by
network affiliates was largely in line with projections, backed by an increase in the value of pharmaceuticals procurementby existing affiliates. As of December 31, 2023, the number of pharmaceutical network members totaled 9,503, up 591
from March 31, 2023, comprising 436 Group pharmacies and 9,067 affiliates.
In the Manufacture and Market Pharmaceutical Business, as of December 31, 2023, the Company’s product lineup
included 101 products spanning 48 active pharmaceutical ingredients. While the Company stopped accepting orders
for some products due to the impact of shipment adjustments, the number of new partner pharmacies steadily grew inthe third quarter of the fiscal year under review, with the total number of partner pharmacies reaching 4,414 as ofDecember 31, 2023, up 847 year-on-year.
In the Digital Shift Business, the number of pharmacies that have adopted the Group’s services as of December 31,
2023 totaled 4,445 (up 1,054 compared with March 31, 2023).
As a result, segment sales for the nine months ended December 31, 2023 were 82,105 million yen (+5.2% YoY), andoperating profit was 4,965 million yen (+15.5% YoY).

2

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2023

2) Leasing and Facility-related Segment
In this segment, sales amounted to 2,560 million yen (+4.6% YoY), due to robust management fee income fromproperties under management and an increase in construction orders. Operating profit was 129 million yen, improvingfrom an operating loss of 97 million yen booked in the same period of the previous fiscal year, owing to the reallocationof business development division costs, which were previously booked in this segment, to the Community Pharmacy
Network Segment, as the division will now focus on the development of the Group’s community pharmacies. Also
contributing to the profit improvement was the revision of staff allocation and advertising expenses for the Wisteria
serviced residence for the elderly.
As of December 31, 2023, Wisteria Senri-Chuo had an occupancy rate of 62.2% (51 out of 82 units occupied), andWisteria Minami-Ichijo an occupancy rate of 75.9% occupancy rate (88 out of 116 units occupied). The overall
occupancy rate at the five serviced residences for the elderly stood at 83.3%. The Group will focus on meeting thechanging needs of residents and cultivate new sales routes, and continue to conduct aggressive sales activities.
3) Meal Catering Segment
In the Meal Catering Segment, while sales grew owing to a revision of the contract unit price, the gross profit margin
declined due to soaring purchase prices. As a result, segment sales were 1,781 million yen (+4.7% YoY), and theoperating loss was 24 million yen (versus an operating loss of 55 million yen in the same period of the previous year).
4) Other Segment
In the Other Segment, the Group provides home-visit nursing care. While the number of home visits rose, the Group
incurred upfront costs due to increased headcount. As a result, sales came to 237 million yen (+3.6% YoY) while thesegment posted an operating loss of 30 million yen (versus an operating loss of 14 million yen in the same period of theprevious fiscal year).

(2) Explanation of Financial Position
As of December 31, 2023, total assets amounted to 67,503 million yen, up 1,279 million yen from March 31, 2023.
Current assets amounted to 21,024 million yen, up 758 million yen from March 31, 2023, primarily due to an increase inmerchandise. Non-current assets were 46,479 million yen, up 521 million yen from March 31, 2023, mainly reflecting an
increase in leased assets, net, included in other, net, under property, plant and equipment.
Total liabilities were 51,896 million yen, up 160 million yen from March 31, 2023. Current liabilities totaled 23,736 million
yen, up 2,386 million yen from March 31, 2023, mainly due to an increase in accounts payable-trade. Non-current liabilities
were 28,159 million yen, down 2,226 million yen from March 31, 2023, largely as a result of a decline in long-termborrowings.
Net assets were 15,607 million yen, an increase of 1,118 million yen from March 31, 2023. This was mainly due to anincrease in retained earnings.

(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, 2024, which wasannounced on November 7, 2023.

3

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2023

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet(Millions of yen)
Nine months ended
December 31, 2023
(as of December 31, 2023)

Fiscal year ended
March 31, 2023
(as of March 31, 2023)
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Unearned revenue from sale of accounts
receivable
Purchased receivables - dispensing fees
Merchandise
Raw materials

8,141
3,437

8,536
3,198

1,039

1,085

463
5,160

452

17
2

Work in process
Supplies

74
1,939

Other
Allowance for doubtful accounts

6,350
20
8
78

(11)

1,305
(13)

20,26521,024

Buildings and structures, net
Land13,164
8,916

13,185
9,139

Construction in progress
Other

165
4,814

313
5,520

Total property, plant and equipment

27,06028,15911,183548

10,558578

Total current assets
Non-current assets
Property, plant and equipment

Intangible assets
Goodwill
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Guarantee deposits

74

101

11,807

11,238

159

174
3,327

3,222
2,926

Deferred tax assets
Other

2,788
810

Allowance for doubtful accounts

802
(19)

Total investments and other assets

7,090

7,081

45,95846,47966,22367,503

Total non-current assets
Total assets

4

(19)

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2023

(Millions of yen)
Nine months ended
December 31, 2023
(as of December 31, 2023)

Fiscal year ended
March 31, 2023
(as of March 31, 2023)
Liabilities
Current liabilities

9,937
1,016

Accounts payable – trade
Short-term borrowings

5,152
600

Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Other

1,569

Total current liabilities

11,911
1,847
4,703
384
836

2

53

3,071

3,999

21,34923,736Long-term borrowings
Provision for retirement benefits for directors(and other officers)
Provision for share awards for directors (andother officers)
Retirement benefit liability

20,226

17,113

637

657

243

269

4,157

4,387

Other

5,121

5,731

Total non-current liabilities

30,38528,15951,73551,896

Share capital
Capital surplus

2,128
1,182

2,128
937

Retained earnings
Treasury shares

11,606(326)

12,933(326)

Total shareholders' equity

14,59015,672

(2)

8

2
(139)

1
(120)

(139)

(110)

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

37

45

14,48815,607

66,22367,503

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2023

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

Net sales
Cost of sales

Nine months ended
December 31, 2022
(from April 1, 2022
to December 31, 2022)
81,87847,591(Millions of yen)
Nine months ended
December 31, 2023
(from April 1, 2023
to December 31, 2023)
86,17550,292Gross profit

34,28735,882

Selling, general and administrative expenses

31,94232,813Operating profit

2,344

3,069

Non-operating income
Interest and dividend income

55Outsourcing service income
Rental income from facilities

59
101

46
106

Subsidy income
Miscellaneous income

197
59

38
80

Total non-operating income

423

275

Non-operating expenses
Loss on sale of receivables

41

44Interest expenses
Miscellaneous losses

206
20

221
34

Total non-operating expenses

268

300

2,499

3,044

7

Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of businesses

－

13
27

Total extraordinary income

741

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

0
51

－
15

Impairment losses
Loss on store closings

18
14

5
6

Other

18

3

Extraordinary losses

103

31

Profit before income taxes

Total extraordinary losses

2,403

3,054

Income taxes - current
Income taxes - deferred

855
338

1,114
238

Total income taxes

1,194

1,352

Profit

1,209

1,701

14

8

1,195

1,693

Profit (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 Nine Months Ended December 31, 2023

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

Nine months ended
December 31, 2022
(from April 1, 2022
to December 31, 2022)
1,209(Millions of yen)
Nine months ended
December 31, 2023
(from April 1, 2023
to December 31, 2023)
1,701

5

11

6

(1)

14

19

26

29

Comprehensive income

1,235

1,730

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

1,221

1,722

14

8

7

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2023

(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. Nine months ended December 31, 2022 (from April 1, 2022 to December 31, 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

78,061

1,886

1,700

228

81,878－81,878

17

562

0

－

579

(579)

－

Total

78,078

2,448

1,701

228

82,457(579)

81,878Segment profit (loss)

4,299

(97)

(55)

(14)

4,131

(1,787)2,344

Notes: 1. The negative 1,787 million yen adjustment to segment profit (loss) includes 235 million yen in elimination ofintersegment transactions and 2,022 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. Nine months ended December 31, 2023 (from April 1, 2023 to December 31, 2023)
1.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

82,069

2,087

1,780

237

86,175－86,175

36

472

0

－

510

(510)

－

Total

82,105

2,560

1,781

237

86,685(510)

86,175

Segment profit (loss)

4,965

129

(24)

(30)

5,039

(1,970)3,069

Notes: 1. The negative 1,970 million yen adjustment to segment profit (loss) includes 208 million yen in elimination ofintersegment transactions and 2,178 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.
2. From the first quarter of the fiscal year under review, the costs of the business development division, which werepreviously allocated to the Leasing and Facility-related Segment, have been transferred to the Community
Pharmacy Network Segment, as the division will focus on the development of the Company’s community
pharmacies (the amount transferred in the nine-month period under review was 110 million yen).

8