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 Fiscal Year Ended March 31, 2024 (Japanese GAAP)May 10, 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 Ordinary General Meeting of Shareholders: June 20, 2024
Scheduled date for dividend payment:
June 21, 2024
Scheduled date for annual securities report submission:
June 21, 2024
Preparation of supplemental explanatory materials:
Yes
Results briefing to be held:
Yes (for institutional investors and analysts)(Amounts of less than one million yen are rounded down)
1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2024 (April 1, 2023 to March 31, 2024)(1) Consolidated operating results
Net sales
Fiscal year ended

EBITDA

Operating profit

Million yen%

Million yen% Million yen

March 31, 2024

115,361

5.3

6,997

14.3

March 31, 2023

109,551

2.7

6,122

(8.7)

Note: Comprehensive income:Fiscal year ended March 31, 2024
Fiscal year ended March 31, 2023
Note: EBITDA = (operating profit + depreciation + goodwill amortization)(Percentages indicate YoY change)
Profit attributable toOrdinary profit
owners of parent%

Million yen%

Million yen

3,832

21.1

3,163

(17.9)

%

3,825

14.0

1.860

15.5

3,355

(22.2)

1.610(32.7)

1,898 million yen (18.7% YoY)
1,599 million yen (-33.0% YoY)

Earnings per share

Diluted earnings
per share

Return on equity

Ordinary profit tototal assets

Yen

Yen

%

%

%

March 31, 2024

61.89

－

12.6

5.7

3.3

March 31, 2023

53.38

－

11.6

5.2

2.9

Fiscal year ended

Operating profit
marginReference: Equity in earnings (losses) of affiliates:

Fiscal year ended March 31, 2024
- million yen
Fiscal year ended March 31, 2023
- million yen
Note: Please refer to “Appropriate use of earnings forecast and other special notes 2” for details of earnings per share and return on equity
calculations.

(2) Consolidated financial position
Total assets
As of

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

March 31, 2024

68,14915,21922.3

519.06

March 31, 2023

66,223

14,48821.8

478.86

Reference: Shareholders’ equity:

As of March 31, 2024
15,171 million yen
As of March 31, 2023
14,451 million yen
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.

(3) Consolidated cash flows
Cash flows fromoperating activities
Fiscal year ended

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at end of
periodMillion yen

Million yen

Million yen

Million yen

March 31, 2024

7,725

(3,649)(3,944)8,242

March 31, 2023

4,973

(2,114)(2,918)8,111

2. Dividends
Dividends per share
End of
Q1

End ofQ2

End ofYear-end
Q3

Total

Total dividends

Payout ratio(consolidated)

Dividend on
equity ratio(consolidated)

Yen

Yen

Yen

Yen

Yen

Million yen%%

March 31, 2023

－

6.00

6.00

12.00

366

22.5

2.6

March 31, 2024
March 31, 2025
(forecast)

－

6.00

－
－

6.00

12.00

361

19.4

2.4

－

6.00

－

6.00

12.00

Fiscal year ended/ending

17.5

Note: Please refer to “Appropriate use of earnings forecast and other special notes 2” for details of payout ratio (consolidated) and dividend on
equity ratio (consolidated) calculations.

3. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2025 (April 1, 2024 to March 31, 2025)(Percentages indicate YoY change)
Profit attributable
Earnings
Net sales
EBITDA
Operating profit Ordinary profit
to owners ofper share
parentMillion yen%

Million yen%

Millionyen% Million yen%

Million yen%

Yen

First half

59,500

5.4

3,260

28.5

1,600

(6.6)

1,590

(6.1)

785

(8.9)

26.86

Full-year

122,000

5.8

7,450

6.5

4,000

4.4

3,950

3.3

2,000

7.5

68.43

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) 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(3) Number of shares outstanding (common stock)
1. Shares outstanding
As of March 31, 2024
(including treasury shares)
2. Treasury shares
As of March 31, 2024
outstanding
3. Period-average sharesFiscal year ended
outstanding
March 31, 2024

30,642,600

As of March 31, 2023

30,642,600

1,414,055

As of March 31, 2023

464,055

30,069,528

Fiscal year ended
March 31, 2023

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 shares outstanding and period-average shares outstanding.

(Reference) Summary of Non-Consolidated Financial Results
1. Non-Consolidated Financial Results for the Fiscal Year Ended March 31, 2024 (April 1, 2023 to March 31, 2024)(1) Non-consolidated operating results(Percentages indicate YoY change)
Net sales
Fiscal year ended

Operating profit

Million yen

Ordinary profit

Profit%Million yen%

Million yen%

Million yen%

March 31, 2024

8,796

8.5

926

115.8

2,713

14.4

2,344

8.3

March 31, 2023

8,108

10.0

429

6.2

2,372

9.0

2,165

(1.5)

Earnings per share
Fiscal year ended

Diluted earnings
per share

Yen

Yen

March 31, 2024

77.98

－

March 31, 2023

71.75

－

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

(2) Non-consolidated financial position
Total assets
As of

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

March 31, 2024

54,081

19,73836.5

675.33

March 31, 2023

53,091

18,30134.5

606.46

Reference: Shareholders’ equity:

As of March 31, 2024
19,738 million yen
As of March 31, 2023
18,301 million yen
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.

*The financial information in this report is not subject to audits 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 from forecasts due to a variety of factors. For matters concerning
earnings forecasts, please refer to page 5 of the attached materials “1. Overview of Operating Results (4) Future Outlook.”
2. In both consolidated and non-consolidated balance sheets for the fiscal year ended March 31, 2024, the Company's
shares held as trust assets of the Board Benefit Trust (BBT) are recorded as treasury shares. They are included in treasury
shares in calculations of earnings per share, return on equity, equity ratio, net assets per share, shareholders’ equity,
dividend payout ratio (consolidated), dividend on equity ratio (consolidated), period-end treasury shares outstanding andperiod-average shares outstanding.

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

Accompanying Materials – Contents
1. Overview of Operating Results .......................................................................................................................................... 2(1) Overview of Operating Results for the Fiscal Year Under Review ................................................................................ 2(2) Overview of Financial Position ..................................................................................................................................... 3(3) Overview of Cash Flows ............................................................................................................................................... 4(4) Outlook ......................................................................................................................................................................... 5(5) Dividend Policy and Dividends for the Fiscal Year Ended March 2024 and the Fiscal Year Ending March 2025 ......... 5
2. Group Companies ............................................................................................................................................................. 6
3. Management Policy ........................................................................................................................................................... 8(1) Our Basic Management Policy ..................................................................................................................................... 8(2) Medium to Long-Term Management Strategy and Targeted Management Benchmarks .............................................. 8(3) Challenges to be Addressed by the Company.............................................................................................................. 8(4) Other Significant Matters Concerning Corporate Management .................................................................................... 9
4. Basic Policy on the Selection of Accounting Standards..................................................................................................... 9
5. Consolidated Financial Statements and Primary Notes .................................................................................................. 10(1) Consolidated Balance Sheet ...................................................................................................................................... 10(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income .................................... 12(3) Consolidated Statement of Changes in Shareholders’ Equity .................................................................................... 14(4) Consolidated Statement of Cash Flows ..................................................................................................................... 16(5) Notes to Consolidated Financial Statements .............................................................................................................. 18(Notes to going concern assumptions) ......................................................................................................................... 18(Changes in presentation of Consolidated Statement of Changes in Shareholders’ Equity) ........................................ 18(Segment information).................................................................................................................................................. 19(Per share information) ................................................................................................................................................ 23(Significant subsequent events) ................................................................................................................................... 24-1-

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

1. Overview of Operating Results(1) Overview of Operating Results for the Fiscal Year Under Review
In the fiscal year ended March 31, 2024, the Japanese economy gradually recovered as socioeconomic activities
normalized prompted by the reclassification of COVID-19 as a Class 5 infectious disease. The economic outlook,however, remains clouded due to ongoing inflation against a backdrop of soaring raw material prices caused by the
prolonged Russia-Ukraine conflict and foreign exchange rate fluctuations.
In the pharmaceuticals industry where the Group operates, the business environment remains challenging due to theongoing implementation of measures to contain healthcare costs, including off-year revisions of NHI drug prices, asJapan’s aging population is putting an increasing strain on the country’s healthcare finances.
Under these conditions, highlights of the Group’s financial results in the fiscal year under review were as follows. In
the Community Pharmacy Business in the Community Pharmacy Network Segment, the unit price of prescriptions
declined as the transitional measures for community support system premiums ended. However, the number ofprescriptions filled increased, owing to diminished concerns over seeking in-person medical consultations due to thedowngrading of COVID-19 to a Class 5 infectious disease, the outbreak of multiple respiratory infections, digitalization
initiatives including the use of the official LINE messaging app account, Tsunagaru Pharmacy, to send and receive
prescriptions, and enhanced post-dispensing patient follow-up. In the Pharmaceutical Network Business in the same
segment, the net increase in network affiliates fell short of expectations due to affiliate withdrawals resulting frompharmacy closures and M&A, but the total value of pharmaceutical orders placed by network affiliates was largely inline with projections, thanks to increased value of pharmaceuticals purchased by existing affiliates. On the expenses
front, the Group made concerted efforts to improve productivity and contain various costs. As a result, in the fiscal year
under review, net sales amounted to 115,361 million yen (+5.3% YoY), operating profit 3,832 million yen (+21.1% YoY),
ordinary profit 3,825 million yen (+14.0% YoY), and profit attributable to owners of parent 1,860 million yen (+15.5%
YoY).
Results by segment were as follows. Sales in each segment include intersegment sales.
From the beginning of the fiscal year under review, we have reallocated pharmacy development costs, which werepreviously booked in the Leasing and Facility-related Segment, to the Community Pharmacy Network Segment. This
reallocation, totaling 147 million yen for the fiscal year under review, was made due to our decision to specialize in thedevelopment of the Group’s community pharmacies.
1)

Community Pharmacy Network Segment
In the Community Pharmacy Network Segment, we are committed to providing value throughout the entire

pharmaceutical supply chain. To this end, we operate community pharmacies, support pharmacy management throughour pharmaceutical networks, manufacture and market pharmaceuticals, and support pharmacies transition into family
pharmacies using the Tsunagaru Pharmacy service.
In the Community Pharmacy Business, the unit price of prescriptions dropped as the transitional measures forcommunity support system premiums ended, but the number of prescriptions filled increased, owing to abated concerns
over seeking in-person medical consultations with the downgrading of COVID-19 to a Class 5 infectious disease, theoutbreak of multiple respiratory infections, digitalization initiatives including the use of Tsunagaru Pharmacy to send andreceive transcriptions, and enhanced post-dispensing patient follow-up. In the fiscal year under review, we opened 13
community pharmacies, including five in medical malls, and one drug store, and acquired 18 community pharmacies
through M&A. At the same time, we closed and transferred 10 stores, including one drug store. As a result, as of March
31, 2024, we had 450 community pharmacies, one in-home care plan support center, and nine cosmetics/drug stores.
In the Pharmaceutical Network Business, the net increase in the number of network affiliates fell short of expectations
due to affiliate withdrawals resulting from pharmacy closures and M&A. However, the total value of pharmaceuticalorders placed by network affiliates was largely in line with projections, owing to increased value of pharmaceuticals
purchased by existing affiliates. As of March 31, 2024, pharmaceutical network members totaled 9,756, up 844 fromMarch 31, 2023, consisting of 450 Group pharmacies and 9,306 affiliates.
In the Manufacture and Market Pharmaceutical Business, as of March 31, 2024, the Group offered 103 products
2Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

representing 48 different active pharmaceutical ingredients (APIs) (shipments of six products representing three APIs
were under adjustment). As of March 31, 2024, partner pharmacies numbered 4,998, up 1,261 year-on-year, on theback of steady growth in new partner pharmacies in the fiscal year under review.
In the Digital Shift Business, the number of pharmacies that have adopted the Group’s services as of March 31, 2024
totaled 4,682 (up 1,291 compared with March 31, 2023)
As a result, segment sales were 109,904 million yen (+5.3% YoY) and operating profit was 6,433 million yen (+9.3%
YoY).
2)

Leasing and Facility-related Segment
Segment sales amounted to 3,611 million yen (+3.3% YoY), driven by robust management fee income from properties

under management and an uptick in construction orders. Segment operating profit was 158 million yen (operating lossof 92 million yen in the previous fiscal year). Profit growth was partly due to the reallocation of pharmacy development
costs to the Community Pharmacy Network Segment, following our decision to specialize in developing the Group’s
community pharmacies. Additionally, a review of staff allocation and advertising expenses for the Wisteria serviced
residence for the elderly also contributed to the improvement in profit.
As of March 31, 2024, Wisteria Senri-Chuo had an occupancy rate of 62.2% (51 out of 82 units occupied), andWisteria Minami-Ichijo had an occupancy rate of 75.9% (88 out of 116 units occupied). The overall occupancy rate at
the five serviced residences for the elderly stood at 83.0%. The Group will focus on meeting the changing needs ofresidents 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 2,360 million yen (+3.1% YoY), and theoperating loss was 43 million yen (versus an operating loss of 65 million yen in the same period of the previous year).
4)

Other Segment
The In the Other Segment, the Group provides home-visit nursing care. While the number of home visits rose, theGroup incurred upfront costs due to increased headcount. As a result, sales came to 314 million yen (+3.1% YoY) while
the segment posted an operating loss of 43 million yen (versus an operating loss of 22 million yen in the same periodof the previous fiscal year).

(2) Overview of Financial Position
As of March 31, 2024, total assets amounted to 68,149 million yen, an increase of 1,926 million yen from March 31,
2023. Current assets were 20,773 million yen, up 507 million yen from March 31, 2023, largely due to an increase inaccounts receivable–trade.
Non-current assets were 47,376 million yen, up 1,418 million yen from March 31, 2023. This mainly reflected
increases in lease assets (net) and deferred tax assets.
Total liabilities were 52,930 million yen, an increase of 1,195 million yen compared with March 31, 2023. Current
liabilities amounted to 23,213 million yen, up 1,864 million yen from March 31, 2023, primarily due to increases inaccounts payable–trade and income taxes payable. Non-current liabilities were 29,716 million yen, down 669 million
yen from March 31, 2023. This was largely due to a decline in long-term borrowings, offsetting an increase in leaseobligations.
Net assets totaled 15,219 million yen, an increase of 730 million yen from March 31, 2023. This was mainly due toan increase in retained earnings, despite an increase in treasury shares (decline in net assets).

3Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(3) Overview of Cash Flows(Status of cash flows)
As of March 31, 2024, the balance of cash and cash equivalents stood at 8,242 million yen, up 131 million yen
compared with March 31, 2023. The status of cash flows for the fiscal year under review is detailed below.
(Cash flows from operating activities)
Net cash provided by operating activities was 7,725 million yen (versus 4,973 million yen provided in the previous
fiscal year). This was primarily due to inflows of 3,451 million yen in profit before income taxes, 2,031 million yen in
depreciation, and 1,132 million yen in amortization of goodwill, offsetting an outflow of 1,263 million yen in income tax
paid.
(Cash flows from investing activities)
Net cash used in investing activities totaled 3,649 million yen (2,114 million yen used in the previous fiscal year). Thiswas mainly due to 1,862 million yen in purchase of property, plant and equipment, 728 million yen in purchase of sharesof subsidiaries resulting in change in scope of consolidation, and 501 million yen in payments for acquisition of business.
(Cash flows from financing activities)
Net cash used in financing activities was 3,944 million yen (2,918 million yen used in the previous fiscal year). Thiswas primarily due to a 2,374 million yen decrease in borrowings and 555 million yen in purchase of treasury shares.
Reference: Cash Flow Indicators

Equity ratio (%)
Equity ratio based on market
value (%)
Interest-bearing debt to cash
flow ratio (years)
Interest coverage ratio (times)

Fiscal year
ended March
31, 2020

Fiscal year
ended March
31, 2021

Fiscal year
ended March
31, 2022

Fiscal year
ended March
31, 2023

Fiscal year
ended March
31, 2024

14.2

17.3

21.1

21.8

22.3

19.7

33.3

26.2

18.2

28.5

8.9

6.3

7.4

6.1

3.8

17.5

24.4

21.9

18.0

29.3

Equity ratio: Shareholders’ equity/total assets
Equity ratio based on market value: Market capitalization/total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt/cash flow
Interest coverage ratio: Cash flow/interest payment
Note:
1. Indicators are calculated based on consolidated figures.
2. Market capitalization is determined based on the number of shares outstanding excluding treasury shares.
3. Cash flow refers to cash flows from operating activities.
4. Interest-bearing debt refers to all liabilities on the consolidated balance sheet requiring the payment of interest.

4

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(4) Outlook
In the NHI drug price and dispensing fee revisions of April 2024, drug prices were reduced by 0.97% on average,
while dispensing fees were increased by 0.16% and by another 0.28% as part of the government’s measures to propel
wage increases.
Against this backdrop, in the pharmacy industry, we expect the need to streamline operations and stabilize
management to continue holding firm, as pharmacies seek to further focus on interpersonal operations while responding
to the deteriorating business environment.
In the Community Pharmacy Business under the Community Pharmacy Network Segment, we will continue focusing
on strengthening interpersonal operations by fostering a medical mindset and providing quality drug therapies, andconsistently partake in the digitalization of healthcare by promoting the use of Individual Number Cards as healthinsurance cards. We also intend to bolster pharmacy development and expand our pharmacy network by opening new
locations, but expect costs to precede any gains in the short term.
In the Pharmaceutical Network Business, we plan to expand the service lineup, and roll out measures to acquire new
network affiliates and further streamline the distribution of pharmaceuticals. For the Manufacture and Market
Pharmaceutical Business, we will fortify the system for ensuring stable supply and expand the customer base. For the
Digital Shift Business, we intend to increase the number of pharmacies using the official LINE account, Tsunagaru
Pharmacy, and expand new services. In April 2024, we established a new subsidiary mainly engaged in pharmaceutical
distribution, but expect costs to precede any profits in the short term.
As a result of the above, for the fiscal year ending March 31, 2025, we forecast net sales of 122,000 million yen(+5.8% YoY), EBITDA of 7,450 million yen (+6.5% YoY), operating profit of 4,000 million yen (+4.4% YoY), ordinary
profit of 3,950 million yen (+3.3% YoY), and profit attributable to owners of parent of 2,000 million yen (+7.5% YoY).

(5) Dividend Policy and Dividends for the Fiscal Year Ended March 2024 and the Fiscal Year Ending March2025
Our basic policy is to continuously provide our shareholders with stable dividends commensurate with our businessperformance, while securing the internal reserves necessary to strengthen our financial position, expand the scale ofour business, and develop our human resources.
For the fiscal year ended March 31, 2024, we plan to pay a year-end dividend of six yen per share. Annual dividends
will be 12 yen per share, including an interim dividend of six yen per share previously paid on December 11, 2023.
For the fiscal year ending March 31, 2025, we plan to pay an interim dividend and a year-end dividend of six yen per
share each (annual dividend of 12 yen per share). This amount was determined based on the consolidated earnings
forecast for the fiscal year ending March 31, 2025.

5

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

2. Group Companies
As of March 31, 2024, our corporate group consists of Medical System Network Co., Ltd. (the Company) and 17
consolidated subsidiaries. Its business segments include the Community Pharmacy Network Segment, the Leasing andFacility-related Segment, the Meal Catering Segment, and the Other Segment. Included below is a summary of how thesesegments are arranged in accordance with our business activities.
The classifications indicated below correspond to the Company's business segments.

(1) Community Pharmacy Network Segment
1) Community Pharmacy BusinessThis business consists primarily of pharmacy management and operation conducted by twelve of our consolidated
subsidiaries. Additionally, consolidated subsidiary Hokkaido Institute for Pharmacy Benefit Co., Ltd. publishes technicalbooks for pharmacists and other healthcare professionals while also analyzing pharmaceutical data.
2) Pharmaceutical Network BusinessWithin this business, we have adopted a business model focused on improving the efficiency of the pharmaceutical
distribution process and providing comprehensive management support services to pharmacies by facilitating thepurchase and sale of pharmaceuticals between pharmacies, hospitals and clinics, and pharmaceutical wholesalers. The
Pharmaceutical Network Business comprises the following three specific operations.
a. Pharmaceutical network operations
These activities form the operational core of the Pharmaceutical Network Business. They involve negotiating prices
in an appropriate manner (i.e., prices of individual items) with pharmaceutical wholesalers and making payments onbehalf of pharmacies, hospitals, and clinics, while also proposing inventory management systems and providing slow
moving inventory clearance services. Through these activities, we help improve the operational efficiency of these
institutions while also facilitating the stabilization of their business operations.
b. Pharmaceutical system-related services
These activities focus on the development, sale, and maintenance of computer systems for preparing medical fee
statements and associated peripherals for pharmacies. Through these operations, we also sell dispensing equipment,
as well as fixtures and fittings, to pharmacies and other customers.
c. Receivable securitization support services
Through these services, we provide means of financing to corporate members of our pharmaceutical network
affiliates. Specifically, we help member pharmacies, hospitals, and clinics that examine and fill prescriptions for patientswith health insurance coverage raise funds by facilitating the securitization of insurance claims (dispensing, medical
treatment, and nursing care fee receivables) issued by Health Insurance Claims Review & Reimbursement Services
or the National Health Insurance Organization.
3) Manufacture and Market Pharmaceuticals BusinessIn this business, consolidated subsidiary Feldsenf Pharma Co., Ltd. manufactures and markets genericpharmaceuticals.
4) Digital Shift Business
Through this business, consolidated subsidiary PharmaShift Co., Ltd. supports the transition of standard pharmacies
into family pharmacies with the goal of establishing a new pharmaceutical platform actualized through theimplementation of digital technologies.

6Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(2) Leasing and Facility-related Segment
In the Leasing and Facility-related Segment, the Company and consolidated subsidiary Paltecno Co., Ltd. develop
pharmacy locations and lease and manage buildings. We also provide medical practice startup consulting services andoperate medical malls, where multiple clinics of varying specialties and pharmacies are located in the same space, andmedical buildings, which house multiple clinics in one building. In addition, we operate serviced residences for the elderly,
design and supervise the construction of medical facilities, and provide insurance services.

(3) Meal Catering Segment
Through this segment, consolidated subsidiaries Total Medical Service Co., Ltd. and SAKURAFOOD Co., Ltd. perform
meal catering services for hospitals and welfare facilities.

(4) Other Segment
Through this business, we dispatch nurses and other personnel to the domiciles of the elderly and infirm, where they
provide services such as nursing care and advisory counseling regarding medical treatment.

7

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

3. Management Policy(1) Our Basic Management Policy
In accordance with our corporate philosophy, which calls for us to "facilitate healthy living as a beacon of light thatsafeguards members of communities throughout their lives while generating quality medical infrastructure," we focus on
two core businesses: the Pharmaceutical Network Business, through which we radically streamline inefficient drug
distribution processes between pharmaceutical wholesalers and dispensing pharmacies, and the Dispensing Pharmacy
Business, through which we maintain close ties with local communities. At the same time, we maintain a basic
management policy focused on ensuring healthy lives for local residents by laying groundwork for proper healthcare androbust livelihoods and by facilitating community development that allows these individuals to live safely and securely intheir established places of residence throughout their lives.

(2) Medium to Long-Term Management Strategy and Targeted Management Benchmarks
The Medical System Network Group operates within the pharmaceutical industry, where projections indicate medium
to long-term market expansion stemming from growth in medical spending aimed at addressing Japan's aging population.
At the same time, the industry is characterized by needs to stabilize and improve pharmaceutical distribution, patientoriented separation of medical and dispensary practice, and more efficient pharmacy management to address healthcare
cost reduction measures including revisions to NHI drug prices and dispensing fees.
In response to these circumstances, the Group has formulated its sixth Medium-Term Management Plan, which willfunction as the Company's medium to long-term management strategy for the four-year period beginning with April 2022.
Under this Medium-Term Management Plan, we will further expand the platform integrating the Group’s community
pharmacies with our pharmaceutical network affiliates while focusing on providing quality medical care and services andfacilitating improved efficiency within the pharmaceutical distribution market. Furthermore, we will leverage the strengthof this platform to drive expansion in our pharmacy support businesses (Pharmaceutical Network Business, Manufactureand Market Pharmaceuticals Business, and Digital Shift Business).
We have established the following benchmarks for the fiscal year ending March 31, 2026, the final year of our sixth
Medium-Term Management Plan. In particular, we aim to increase profits by more than 3 billion yen in the pharmacy
support businesses.
・Consolidated net sales

140.0 billion yen

・Consolidated operating profit

6.5 billion yen

・Operating profit margin

4.6%

・Consolidated EBITDA

10.0 billion yen

・Number of pharmaceutical network affiliates

12,000・Number of directly managed community pharmacies

550

・Equity ratio

30.0%

For more details regarding our sixth Medium-Term Management Plan, please refer to our website
URL: https://www.msnw.co.jp/uploads/2022/05/06/earningsreport202203.pdf(3) Challenges for the Company to Address
Based on the current management environment and the 6th Medium-Term Management Plan, the Company will
tackle the following issues.
In the Community Pharmacy Business of the Community Pharmacy Network Segment, we will strive to obtaincommunity support system premiums by strengthening the family pharmacist function and home medical care, further
enhance the interpersonal operations of pharmacists, provide quality drug therapy, and increase prescription acquisition
using the official LINE account, Tsunagaru Pharmacy. In the Pharmaceutical Network Business, we will strengthen oursales structure with the goal of having 12,000 network affiliates, improve distribution, and expand services for affiliate
pharmacies. We aim to have 10,756 network affiliates (a net increase of 1,000) by the end of March 2025. In the8Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

Manufacture and Market Pharmaceuticals Business, we will strengthen our supply chain to ensure stable supply andexpand our customer base, aiming to conduct business with 7,000 partner pharmacies by the end of March 2025. In
the Digital Shift Business, we will expand the number of stores using our official “Tsunagaru Pharmacy” LINE accountand enhance new service offerings, aiming to have a total of 5,700 stores using "Tsunagaru Pharmacy" and 1.4 million
registered users by the end of March 2025.
In the Leasing and Facility-related Segment, we aim to improve occupancy rates of serviced residences for the elderly.
In the meal catering and home-visit nursing care businesses, we will seek to stabilize finances.
On the financial front, we will strive to improve our equity ratio by thoroughly controlling costs across the company
and securing profits, thereby strengthening our financial foundation.

(4) Other Significant Matters Concerning Corporate Management
None to be reported.

4. Basic Policy on the Selection of Accounting Standards
The Group's operations are currently limited to Japan and it is not engaging in any overseas activities at this time.
Therefore, for the foreseeable future, the Group will maintain a policy of preparing its consolidated financial statements inaccordance with Japanese GAAP.
The Company will apply IFRS when it determines that such application would be appropriate based on considerations ofvarious conditions in Japan and overseas.

9Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

5. Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet(Millions of yen)
Fiscal year ended
March 31, 2024
(as of March 31, 2024)

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

8,141
3,437

8,273
4,239

1,039

1,078

463

423

Merchandise
Raw materials

5,160
17

5,404
16

Work in process
Supplies

2
74

38
81

Other
Allowance for doubtful accounts

1,939
(11)

1,231
(14)

Total current assets

20,265

20,773

23,406(10,242)

24,164(11,168)

13,164

12,996

Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
VehiclesAccumulated depreciation
Vehicles, net

110

105

(107)

(99)

3

6

5,286

5,947

Accumulated depreciation(3,798)(4,414)Tools, furniture and fixtures, net

1,488

1,532

Land

8,916

9,290

Leased assets
Accumulated depreciation

3,879
(555)

5,937
(1,753)

Leased assets, net

3,323

4,184

Construction in progress

165

325

Tools, furniture and fixtures

27,06028,336

Intangible assets
Goodwill

Total property, plant and equipment

11,183

10,613

Software
Other

548
74

594
73

11,807

11,281

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

10

159

184

3,222
2,926

3,419
3,339

802
(19)

835
(19)

7,090

7,759

45,95847,376

66,223

68,149Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(Millions of yen)
Fiscal year ended
March 31, 2024
(as of March 31, 2024)

Fiscal year ended
March 31, 2023
(as of March 31, 2023)
Liabilities
Current liabilities
Accounts payable – trade
Short-term borrowings

9,937
1,016

10,935
588

Current portion of long-term borrowings
Lease obligations

5,152
209

5,122
406

Income taxes payable
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Other

600
1,569

999
1,689

2

86

2,861

3,384

Total current liabilities

21,34923,213

Non-current liabilities
Long-term borrowings

20,22618,309

3,913

4,754

637

691

Lease obligations
Provision for retirement benefits for directors(and other officers)
Provision for share awards for directors (andother officers)
Retirement benefit liability

243

278

4,157

4,534

Other

1,208

1,148

Total non-current liabilities

30,38529,716

51,73552,930Share capital
Capital surplus

2,128
1,182

2,128
937

Retained earnings
Treasury shares

11,606(326)

13,100(882)

Total shareholders' equity

14,59015,284

(2)

19

2
(139)

2
(134)

(139)

(112)

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

11

37

47

14,48815,21966,223

68,149Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

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

Net sales
Cost of sales

Fiscal year ended
March 31, 2023
(from April 1, 2022
to March 31, 2023)
109,551
63,629(Millions of yen)
Fiscal year ended
March 31, 2024
(from April 1, 2023
to March 31, 2024)
115,361
67,435Gross profit

45,921

47,925

Selling, general and administrative expenses

42,75844,093Operating profit

3,163

3,832

Non-operating income
Interest income

2

1

Dividend income
Outsourcing service income

3
62

3
52

Rental income from facilities
Subsidy income

132
255

138
75

Miscellaneous income

93

112

Total non-operating income

550

384

277
55

288
61

Non-operating expenses
Interest expenses
Loss on sale of receivables
Miscellaneous losses

25

42

Total non-operating expenses

358

392

3,355

3,825

7

13

Gain on sale of investment securities
Gain on negative goodwill

－
－

0
78

Gain on sale of businesses－

27

Total extraordinary income

7

119

0

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

Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Impairment losses

57
247

－
19
426

Loss on store closings
Other

14
23

44
3

Total extraordinary losses

343

493

Profit before income taxes

3,019

3,451

Income taxes – current

1,366

1,836

Income taxes – deferred

23

(256)

Total income taxes

1,389

1,579

Profit

1,630

1,871

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

12

19

10

1,610

1,860

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

Consolidated Statement Of Comprehensive Income
Fiscal year ended
March 31, 2023
(from April 1, 2022
to March 31, 2023)
1,630(Millions of yen)
Fiscal year ended
March 31, 2024
(from April 1, 2023
to March 31, 2024)
1,871

4

21

1

(0)

(37)

(5)

(30)

26

Comprehensive income

1,599

1,898

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

1,580

1,887

19

10

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

13Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(3) Consolidated Statement of Changes in Shareholders’ Equity
Fiscal year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCapital surplus

2,128

Retained earnings

1,182

Total shareholders’equityTreasury shares

10,393(326)

13,377

Changes during period
Dividends of surplus

(397)

(397)

Profit attributable toowners of parent

1,610

1,610

Disposal of treasury
shares－Purchase Of Shares
Of Consolidated
Subsidiaries－

Net changes of items
other thanshareholders’ equity
Total changes during
periodBalance at end of
period

－

－

1,213

－

1,213

2,128

1,182

11,606(326)

14,590

Accumulated other comprehensive income
Valuation
Total accumulated Non-controlling
difference on
Deferred gains or Remeasurements ofotherinterests
available-for-sale losses on hedges defined benefit plans comprehensive
securities
incomeBalance at beginning of
period

(7)

0

(102)

(108)

17

Total net assets

13,286

Changes during period
Dividends of surplus(397)

Profit attributable toowners of parent

1,610

Disposal of treasury
shares－Purchase Of Shares
Of Consolidated
Subsidiaries－

Net changes of items
other thanshareholders’ equity

4

1

(37)

(30)

19

(11)

Total changes during
period

4

1

(37)

(30)

19

1,201

Balance at end of
period

(2)

2

(139)

(139)

37

14,48814

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

Fiscal year ended March 31, 2024 (April 1, 2023 to March 31, 2024)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCapital surplus

2,128

Retained earnings

1,182

Total shareholders’equityTreasury shares

11,606(326)

14,590Changes during period
Dividends of surplus

(366)

(366)

Profit attributable toowners of parent

1,860

1,860

Disposal of treasury
shares

(555)

Purchase Of Shares
Of Consolidated
Subsidiaries

(555)

(245)

(245)

Net changes in items
other thanshareholders' equity
Total changes during
periodBalance at end of
period

－

(245)

1,493

(555)

693

2,128

937

13,100(882)

15,284

Accumulated other comprehensive income
Valuation
Total accumulated Non-controlling
difference on
Deferred gains or Remeasurements ofotherinterests
available-for-sale losses on hedges defined benefit plans comprehensive
securities
incomeBalance at beginning of
period

(2)

2

(139)

(139)

37

Total net assets

14,488Changes during period
Dividends of surplus(366)

Profit attributable toowners of parent

1,860

Disposal of treasury
shares

(555)

Purchase Of Shares
Of Consolidated
Subsidiaries(245)

Net changes of items
other thanshareholders’ equity

21

(0)

5

26

10

37

Total changes during
period

21

(0)

5

26

10

730

19

2

(134)

(112)

47

15,219Balance at end of
period15

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(4) Consolidated Statement of Cash Flows(Millions of yen)
Fiscal year ended

Cash flows from operating activities

Fiscal year ended

March 31, 2023

March 31, 2024

(from April 1, 2022

(from April 1, 2023

to March 31, 2023)

to March 31, 2024)

Profit before income taxes
Depreciation

3,019
1,825

3,451
2,031

Impairment losses
Gain on bargain purchase

247

426
(78)

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 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
Interest expenses
Loss (gain) on sale of investment securities
Loss (gain) on sale of non-current assets
Loss on retirement of non-current assets
Loss (gain) on sale of businesses
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

－
1,132
40

1,132
110

(36)

(84)

8

3

32

34

36

29

351
(5)

338
(5)

277

265
(0)

－
(7)
57

(13)
19

－
(505)

(27)
(421)

(84)

(39)

(20)

40

(377)
211

(192)
735

(139)

699

475

622

Subtotal

6,539

9,248

Interest and dividends received
Interest paid

4
(276)

4
(263)

(1,294)(1,263)

4,973

7,725

Income taxes paid
Net cash provided by (used in) operating
activities

16Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(Millions of yen)
Fiscal year ended
March 31, 2024
(from April 1, 2023
to March 31, 2024)

Fiscal year ended
March 31, 2023
(from April 1, 2022
to March 31, 2023)
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets(1,373)(1,862)

30

97

(234)

(248)

－

6

(54)

(728)

(80)
4

(501)
43

Loan advances
Proceeds from collection of loans receivable

(130)
6

(47)
4

Payments of guarantee deposits
Proceeds from refund of guarantee deposits

(296)
110

(308)
63

Other

(95)

(168)

(2,114)(3,649)Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings

－
3,200

(428)
3,500

Repayments of long-term borrowings
Repayments of lease obligations(5,469)(253)(5,446)
(403)

－
(395)

(555)
(365)

－

(245)

(2,918)(3,944)

(59)

131

8,171

8,111

8,111

8,242

Proceeds from sale of investment securities
Purchase of shares of subsidiaries resulting inchange in scope of consolidation
Payments for acquisition of businesses
Proceeds from sale of businesses

Net cash provided by (used in) investing activities
Cash flows from financing activities

Purchase of treasury shares
Dividends paid
Purchase of shares of subsidiaries not resulting
in change in scope of consolidation
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of period

17Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(5) Notes to Consolidated Financial Statements(Notes to going concern assumptions)None to be reported.
(Changes in presentation of Consolidated Statement of Changes in Shareholders’ Equity)
Fiscal year ended March 31, 2023 (April 1, 2022 to March 31, 2023)
1. Issued SharesClass of shares

Number of shares at
beginning of period

Common shares

30,642,600

Increase

Number of shares at
end of period

Decrease－

30,642,600－

2. Treasury SharesClass of shares

Number of shares at
beginning of period

Common shares

464,055

Increase

Number of shares at
end of period

Decrease－－

464,055

Note: The number of treasury shares at the end of the fiscal year ended March 31, 2023 includes 401,000 shares in the
Company held by Custody Bank of Japan, Ltd. (Trust account E) as trust assets of the Board Benefit Trust (BBT).
3. Dividends(1) Dividends Paid
Total dividends(million yen)

Resolution

Class of shares

June 22, 2022
Ordinary General
Meeting of
Shareholders

Commonshares214

November 4, 2022
Board of Directors
meeting

Commonshares183

Dividend pershare (yen)Record date

Effective date

7.00

March 31, 2022

June 23, 2022

6.00

September 30,
2022

December 12,
2022

Notes:
1. Total dividends based on resolutions adopted during the Ordinary General Meeting of Shareholders held on June 22,2022 include dividends of two million yen on the Company’s shares held by Custody Bank of Japan, Ltd. (Trust account E)
as trust assets of the Board Benefit Trust (BBT).
2. Total dividends based on resolutions adopted by the Board of Directors during a meeting held on November 4, 2022
include dividends of two million yen on the Company’s common shares held by Custody Bank of Japan, Ltd. (Trust accountE) as trust assets of the Board Benefit Trust (BBT).
(2) Dividends for which the record date fell in the fiscal year ended March 31, 2021, but the effective date fell in thefollowing fiscal year
Resolution

Class ofshares

Source ofdividends

Total
dividends(million yen)

Dividend pershare (yen)Record date

Effective dateJune 21, 2023
Ordinary General
Meeting of
Shareholders

CommonsharesRetainedearnings

183

6.00

March 31,2023

June 22,2023

Note: Total dividends based on resolutions to be adopted during the Ordinary General Meeting of Shareholders to be heldon June 21, 2023 include dividends of two million yen on the Company’s common shares held by Custody Bank of Japan,
Ltd. (Trust account E) as trust assets of the Board Benefit Trust (BBT).

18

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

Fiscal year ended March 31, 2024 (April 1, 2023 to March 31, 2024)
1. Issued SharesClass of shares

Number of shares at
beginning of period

Common shares

30,642,600

Increase

Number of shares at
end of period

Decrease－

30,642,600－

2. Treasury SharesClass of shares

Number of shares at
beginning of period

Common shares

464,055

Increase

Number of shares at
end of period

Decrease

950,000

1,414,055－

Note: The number of treasury shares at the end of the fiscal year ended March 31, 2024 includes 401,000 shares in the
Company held by Custody Bank of Japan, Ltd. (Trust account E) as trust assets of the Board Benefit Trust (BBT).
(Reasons for change)
Increase due to purchase of treasury shares by the resolution of the Board of Directors: 950,000 shares

3. Dividends(1) Dividends Paid
Total dividends(million yen)

Resolution

Class of shares

June 21, 2023
Ordinary General
Meeting of
Shareholders

Commonshares183

November 7, 2023
Board of Directors
meeting

Commonshares183

Dividend pershare (yen)Record date

Effective date

6.00

March 31, 2023

June 22, 2023

6.00

September 30,
2023

December 11,
2023

Notes:
1. Total dividends based on resolutions adopted during the Ordinary General Meeting of Shareholders held on June 21,
2023 include dividends of two million yen on the Company’s shares held by Custody Bank of Japan, Ltd. (Trust account E)
as trust assets of the Board Benefit Trust (BBT).
2. Total dividends based on resolutions adopted by the Board of Directors during a meeting held on November 11, 2023
include dividends of two million yen on the Company’s common shares held by Custody Bank of Japan, Ltd. (Trust accountE) as trust assets of the Board Benefit Trust (BBT).
(2) Dividends for which the record date fell in the fiscal year ended March 31, 2024, but the effective date falls in thefollowing year
Resolution

Class ofshares

Source ofdividends

Total cash
dividends(million yen)

Dividend pershare (yen)June 20, 2023
Ordinary General
Meeting of
Shareholders

CommonsharesRetainedearnings

177

6.00

Record date

Effective date

March 31, 2023

June 21, 2024

Note: Total dividends based on resolutions to be adopted during the Ordinary General Meeting of Shareholders to be heldon June 20, 2024 include dividends of two million yen on the Company’s common shares held by Custody Bank of Japan,
Ltd. (Trust account E) as trust assets of the Board Benefit Trust (BBT).
(Segment information)(Segment information, etc.)
1. Description of reporting segments
The Company’s reporting segments represent components of its overall composition for which separate financial
information is available and are regularly evaluated by the Board of Directors to determine how management resources
will be allocated and to assess performance
In the Community Pharmacy Business, we provide management support for pharmacies and other medical
institutions through our pharmaceutical network, operate community pharmacies, and engage in the manufacturing
19Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

and sale of pharmaceuticals. Additionally, we assist in transforming pharmacies into family pharmacies using theofficial LINE account, Tsunagaru Pharmacy. In the Leasing and Facility-related Segment, we develop locations fordispensing pharmacies, provide building leasing services, operate serviced residences for the elderly, and engage indesign and construction supervision of medical facilities. Through the Meal Catering Segment, we perform mealcatering services for hospitals and welfare facilities. Our Other Segment focuses on the dispatch of nurses who provide
at-home care.
2. Method of Calculating Net Sales, Profit (Loss), Assets, Liabilities, and Other Items by Reporting Segment
The accounting methods we apply to our reporting segments are generally identical to those described in the“Significant Accounting Policies for Preparing Consolidated Financial Statements.”
Individual segment profits indicate operating profit. Intersegment sales and transfers are based on market values.
3. Matters related to changes in reportable segments, etc.
From the beginning of the fiscal year under review, we have reallocated pharmacy development costs, which werepreviously booked in the Leasing and Facility-related Segment, to the Community Pharmacy Network Segment. This
reallocation, totaling 147 million yen for the fiscal year under review, was made due to our decision to specialize inthe development of the Group’s community pharmacies.
Fiscal year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Millions of yen)
Reporting segment
Community
Pharmacy
Network

Leasing
andFacilityrelated

Meal
Catering

Other

Total

Adjustments(Note 1)

Amounts on
consolidated
financialstatements(Note 2)

Net sales
Sales to externalcustomers
Intersegment sales ortransfers

104,366

2,590

2,289

304

109,551－

109,551

32

903

0

－

937

(937)

－

Total

104,399

3,494

2,289

304

110,488(937)

109,551

Segment profit (loss)

5,887

(92)

(65)

(22)

5,706

(2,542)

3,163

Segment assets

46,082

16,839720

63

63,7052,518

66,223

Depreciation

1,119

575

1

1

1,697

128

1,825

Amortization of
goodwill

1,131

－

－

－

1,131

0

1,132

Impairment loss

239

6

1

－

247

－

247

Other items

Increase in property,
plant and equipment
4,561
114
8
2
4,687
247
4,935
and intangible assets
Notes:
1. Adjustments are as follows:(1) Adjustment of -2,542 million yen for segment profit (loss) includes 243 million yen in elimination of intersegment
transactions and -2,785 million yen in companywide expenses not allocated to any reporting segment. Companywide
expenses mainly refer to general expenses that do not belong to any reporting segment.
(2) Adjustment of 2,518 million yen for segment assets includes -6,006 million yen in elimination of intersegment
receivables and payables and companywide assets of 8,525 million yen not allocated to any reporting segment.
Companywide assets mainly refer to companywide non-current assets that do not belong to any reporting segment.
(3) Adjustment of 247 million yen for increase in property, plant and equipment and intangible assets mainly represents
the acquisition of property, plant and equipment and intangible assets related to companywide assets.
2. Segment profit (loss) is adjusted with operating profit in the consolidated statement of income.
20

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

Fiscal year ended March 31, 2024 (April 1, 2023 to March 31, 2024)(Millions of yen)
Reporting segment
Community
Pharmacy
Network

Leasing
andFacilityrelated

Meal
Catering

Other

Total

Adjustments(Note 1)

Amounts on
consolidated
financialstatements(Note 2)

Net sales
Sales to externalcustomers
Intersegment sales ortransfers

109,854

2,833

2,359

314

115,361－

115,361

49

778

0

－

828

(828)

－

Total

109,904

3,611

2,360

314

116,189(828)

115,361

Segment profit (loss)

6,433

158

(43)

(43)

6,504

(2,671)

3,832

Segment assets

49,182

17,209769

63

67,223926

68,149Depreciation

1,171

672

1

1

1,847

183

2,031

Amortization of
goodwill

1,132

－

－

－

1,132

－

1,132

Impairment loss

431

0

－

－

431

(4)

426

Other items

Increase in property,
plant and equipment
3,496
81
3
3,580
237
3,818
－
and intangible assets
Notes:
1. Adjustments are as follows:(1) Adjustment of -2,671 million yen for segment profit (loss) includes 259 million yen in elimination of intersegment
transactions and -2,931 million yen in companywide expenses not allocated to any reporting segment. Companywide
expenses mainly refer to general expenses that do not belong to any reporting segment.
(2) Adjustment of 926 million yen for segment assets includes -8,000 million yen in elimination of intersegment receivables
and payables and companywide assets of 8,926 million yen not allocated to any reporting segment. Companywide assets
mainly refer to companywide non-current assets that do not belong to any reporting segment.
(3) Adjustment of 237 million yen for increase in property, plant and equipment and intangible assets mainly represents
the acquisition of property, plant and equipment and intangible assets related to companywide assets.
2. Segment profit (loss) is adjusted with operating profit in the consolidated statement of income.

(Associated information)
Fiscal year ended March 31, 2023 (April 1, 2022 to March 31, 2023)
1. Information for individual products or services
Descriptions have been omitted because similar information is disclosed in the segment information section.
2. Information for individual regions(1) Net Sales
Not applicable since the Company generated no sales through external customers outside of Japan.
(2) Property, Plant and Equipment
Not applicable since the Company holds no property, plant or equipment outside of Japan.
3. Information for individual primary customers
Not applicable since the Company did not generate 10% or more of the net sales indicated by its consolidated
statement of income through any individual customer.

21Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

Fiscal year ended March 31, 2024 (April 1, 2023 to March 31, 2024)
1. Information for individual products or services
Descriptions have been omitted because similar information is disclosed in the segment information section.
2. Information for individual regions(1) Net Sales
Not applicable since the Company generated no sales through external customers outside of Japan.
(2) Property, Plant and Equipment
Not applicable since the Company holds no property, plant or equipment outside of Japan.
3. Information for individual primary customers
Not applicable since the Company did not generate 10% or more of the net sales indicated by its consolidated
statement of income through any individual customer.
(Disclosure of impairment losses on non-current assets for each reporting segment)
Fiscal year ended March 31, 2023(April 1, 2022 to March 31, 2023)
Descriptions have been omitted because similar information is disclosed in the segment information section.
Fiscal year ended March 31, 2024 (April 1, 2023 to March 31, 2024)
Descriptions have been omitted because similar information is disclosed in the segment information section.
(Amortization and unamortized balance of goodwill for each reporting segment)
Fiscal year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Millions of yen)
Reporting segment
Community
Pharmacy
Network

Leasing andFacilityrelated

Meal
Catering

Other

Unadjusted
Total

Companywide
andeliminations

Total

Balance at
11,183－－－
11,183－
11,183end of period
Note: Information concerning amortization of goodwill has been omitted because similar information has been disclosed in
the segment information section.
Fiscal year ended March 31, 2024 (April 1, 2023 to March 31, 2024)(Millions of yen)
Reporting segment
Community
Pharmacy
Network

Leasing andFacilityrelated

Meal
Catering

Other

Unadjusted
Total

Companywide
andeliminations

Total

Balance at
10,613
10,613
10,613－－－－end of period
Note: Information concerning amortization of goodwill has been omitted because similar information has been disclosed in
the segment information section.
(Information on gain on negative goodwill by reportable segment)
Fiscal year ended March 31, 2023 (April 1, 2022 to March 31, 2023)
The Company recorded no significant gains on bargain purchase.
Fiscal year ended March 31, 2024 (April 1, 2023 to March 31, 2024)
In the Community Pharmacy Network Segment, the Company made Cosmos Pharmaceutical Corporation a
22

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

consolidated subsidiary, with March 31, 2024 as the deemed acquisition date. As a result, we recorded a gain on
negative goodwill of 78 million yen in the fiscal year under review.
(Per share information)
Fiscal year ended March 31, 2023
(April 1, 2021 to March 31, 2023)

Fiscal year ended March 31, 2024
(April 1, 2022 to March 31, 2024)

Net assets per share (yen)478.86439.67
Net assets per
share (yen)370.23 519.06

Earnings per share (yen)53.38

79.35(yen)Earnings per share

72.51

61.89

Notes:
1. Information regarding diluted earnings per share has been omitted due to the absence of dilutive shares.
2. The basis for calculation of net assets per share is as follows:

Item

Fiscal year ended
March 31, 2023
(as of March 31, 2023)

Fiscal year ended
March 31, 2023
(as of March 31, 2024)

Total net assets (million yen)

14,48815,219Amount deducted from total net assets (million
yen)

37

47

Of which, non-controlling interests (million yen)

(37)

(47)

Net assets associated with common shares in the
14,451
15,171Company (million yen)
Number of year-end common shares used in the
30,178,545
29,228,545
calculation of net assets per share
Note: Shares in the Company held by Board Benefit Trust (BBT), which are recorded as treasury shares inshareholders' equity, are included in number of the treasury shares deducted from the total number of shares
outstanding at the fiscal year-end for the purpose of calculating net assets per share. The number of such treasury
shares deducted for the calculation of net assets per share was 401,000 shares for the fiscal year ended March
31, 2023 and 401,000 shares for the fiscal year ended March 31, 2024.
3. The basis for calculation of earnings per share is as follows.
Item

Fiscal year ended
March 31, 2023
(April 1, 2022 to March
31, 2023)

Fiscal year ended March
31, 2024(April 1, 2023 to March
31, 2024)

1,610

1,860

Earnings per share
Profit attributable to owners of parent (million yen)Amount not attributed to common shareholders－－(million yen)
Net income attributable to owners of common
1,610
1,860
shares in the parent company (million yen)
Average number of common shares during the30,178,545
30,069,528
periodNote: Shares in the Company held by Board Benefit Trust (BBT), which are recorded as treasury shares inshareholders' equity, are included in number of the treasury shares deducted from the period-average number ofshares outstanding for the purpose of calculating earnings per share. The number of such treasury shares deducted
for the calculation of earnings per share was 401,000 shares for the fiscal year ended March 31, 2023 and 401,000
shares for the fiscal year ended March 31, 2023.

23

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

(Significant subsequent events)(Establishment of a subsidiary)
Pursuant to the resolution of the Board of Directors at a meeting held on February 16, 2024, the Company
established a subsidiary in April 1, 2024, as below.
1. Purpose of establishment
With the goal of enhancing services for network affiliates in the Pharmaceutical Network Business, weestablished a new subsidiary that will handle distribution of pharmaceuticals, primarily generic drugs manufactured
and marketed by subsidiary FELDSENF PHARMA Co., Ltd. With the establishment of the subsidiary, we aim toensure reliable, safe, and efficient distribution of pharmaceuticals and contribute to resolving social issues involvedin ensuring stable supply of pharmaceuticals.
2. Overview of subsidiary(1) Name: MEDI LOGI NET Co., Ltd.
(2) Business: Distribution of pharmaceuticals(3) Date established: April 1, 2024
(4) Capital: 10 million yen(5) Ownership: Company, 100%

(Disposal of treasury shares through third-party allotment)
At a Board of Directors meeting held on May 10, 2024, the Company resolved to dispose of treasury sharesthrough a third-party allotment.
In accordance with the resolution of the Ordinary General Meeting of Shareholders held on June 19, 2015, theCompany introduced the Board Benefit Trust (BBT), through which the Company grants its shares and otherbenefits to Directors.
In continuing the compensation scheme using the BBT, the Company has decided to entrust additional funds to
the BBT so that the trust can acquire necessary shares to grant to Directors in the future. The Company alsodecided to dispose of treasury shares through a third-party allotment to Trust Account E established with Custody
Bank of Japan, Ltd. (a re-trustee, re-trusted by Mizuho Trust & Banking Co., Ltd., the trustee of the BBT) in orderto hold and dispose of Company shares in operating the compensation scheme.
(1) Disposal date: May 29, 2024
(2) Class and number of shares to be disposed of: 180,000 shares of the Company common stock(3) Disposal price: 630 yen per share(4) Total disposal value: 113,400,000 yen(5) Allottee: Custody Bank of Japan, Ltd. (Trust Account E)

24