R Medical System Network / 4350
CoverageUpdate Notes

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On December 15, 2020, Medical System Network Co., Ltd. announced the recording of an extraordinary profit (gains from thesale of shares in an affiliate) and revisions to its full-year consolidated earnings forecast.
At the Board of Directors meeting held the same day, the company announced its resolution to sell a portion of its shareholding(hereinafter referred to as the share transfer) in Genex Inc. (headquartered in Nagoya City, Aichi Prefecture; hereinafter, Genex),
an affiliate not accounted for by the equity method. It expects to record gains from the sale of shares in the affiliate as
extraordinary profit in Q3 FY03/21 parent and consolidated results.
Reason for the share transfer
Medical System Network invested in Genex in December 2015 with the aim to strengthen its purchasing power, build a
distribution system and improve distribution efficiency in generic drugs. Under the terms of the investment, Genex supplied
generic drugs to the group’s dispensing pharmacies and pharmaceuticals network affiliates. Genex now wishes to accept themanagement participation of a fund run by private equity company, J-STAR Co., Ltd. (headquartered in Chiyoda Ward, Tokyo), inorder to further raise its enterprise value and take measures towards listing on the stock exchange in the future. So that it canrealize this, Genex asked Medical System Network whether it could purchase a portion of the Genex shares held by Medical
System Network. The company agreed to the request after carefully considering the effects of Genex’s management plan andcapital policy and concluding that there would be no significant change in its business relationship with Genex and that thefavorable collaborative relationship between the two companies would be maintained following the transfer.
As a result of the above share transfer, Genex will be excluded from the company’s scope of an affiliate not accounted for by theequity method. Medical System Network will also record extraordinary profit from the transfer and has revised its forecast for
full-year FY03/21 accordingly, as shown below.

Revisions to full-year FY03/21 consolidated earnings forecast
Sales:

JPY103.0bn (previously, JPY103.0bn)

Operating profit:

JPY2.5bn (JPY2.5bn)

Recurring profit:

JPY2.5bn (JPY2.5bn)

Net income*:

JPY1.4bn (JPY750mn)

EPS:

JPY45.50 (JPY24.73)*Net income attributable to owners of the parent
This note is the most recent addition to the full report.

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