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, 2022 (Japanese GAAP)
February 3, 2023
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 7, 2023
―
Yes
None
(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Nine Months Ended December 31, 2022
(April 1 to December 31, 2022)(1) Consolidated operating results

Net sales
Nine Months ended
December 31, 2022
Nine Months ended
December 31, 2021

EBITDA

Operating profit

Million yen%

Million yen% Million yen

81,8782.5

4,525(12.5)

79,868

2.2

5,173

5.1

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

Million yen%

Million yen

%

2,344

(23.5)

2,499(28.3)

1,195(44.3)

3,063

10.5

3,485

25.8

2,144

6.5

Note: Comprehensive income for the nine months ended December 31, 2022 was 1,235 million yen (-42.7% YoY), and comprehensive income forthe nine months ended December 31, 2021 was 2,155 million yen (+7.6% YoY)
Note: EBITDA = (operating profit + depreciation + goodwill amortization)

Earnings per share
Nine Months ended
December 31, 2022
Nine Months ended
December 31, 2021

Diluted earnings
per share

Yen

Yen

39.60

－

71.08

－

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, 2022
As ofMarch 31, 2022

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

68,52014,12520.6

466.9962,941

13,28621.1

439.67

Reference: Shareholders’ equity amounted to 14,093 million yen as of December 31, 2022 and 13,268 million as of March 31, 2022.
Note: Please refer to “Appropriate use of earnings forecast and other special notes 2” for details of shareholders’ equity, equity ratio, and net
assets per share calculations.

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

End of Q3

Year-end

Total

Yen

Yen

Yen

Yen

Yen

－

5.00

－

7.00

12.00

－

6.00

－
6.00

12.00

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

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

Full-year

EBITDA

Operating profit

Million yen%

Million yen%

Million yen%

110,000

3.1

6,200

(7.6)

3,500

(9.1)

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

3,700 (14.2)

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

Million yen%

Yen

1,750 (26.9)

57.99

*Notes(1) Changes in significant subsidiaries during the period under review: None
(Transfers of specified subsidiaries associated with changes in the Company’s scope of consolidation)
Newly added:
None
Excluded:None(2) Distinctive accounting methods applied when preparing quarterly consolidated financial statements: None
(3) Changes in accounting policies, accounting estimates and retrospective restatements
1. Accounting policy changes due to accounting standard revisions, etc.:
None
2. Other accounting policy changes:
None
3. Changes in accounting estimates:
None
4. Retrospective restatements:
None(4) Number of shares outstanding (common stock)
1. Shares outstanding(including treasury
As of December 31, 2022
stock)

30,642,600

As of March 31, 2022

30,642,600

2. Treasury shares
outstanding

As of December 31, 2022

464,055

As of March 31, 2022

464,055

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

Nine months ended
December 31, 2022

30,178,545

Nine months ended
December 31, 2021

30,168,454

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, 2022

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

1

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2022

1. Qualitative Information on Quarterly Financial Performance(1) Explanation of Operating Results
During the nine months ended December 31, 2022, the Community Pharmacy Business was affected by a decline in
the prescription unit price due to the impact of the NHI drug price and dispensing fee revisions implemented in April 2022,
but the opening of new stores and acquisition of stores contributed to earnings. In the Pharmaceutical Network Business,
the number of new network affiliates remained strong. As a result of these, the Company recorded net sales of 81,878
million yen (+2.5% YoY). On the profit side, the Community Pharmacy Business was weighed down by factors such as
implementation of the NHI drug price and dispensing fee revisions and increased labor expenses accompanying efforts
to strengthen interpersonal services. As a result, the Company booked operating profit of 2,344 million yen (-23.5% YoY),
ordinary profit of 2,499 million yen (-28.3% YoY), and profit attributable to owners of parent of 1,195 million yen (-44.3%
YoY). Although sales were up and profits fell compared with the same period of the previous fiscal year, they weregenerally in line with the Company’s plan at the beginning of the year.
Results by segment were as follows. Net sales for individual segments include intersegment sales.
1) Community Pharmacy Network Segment
In the Community Pharmacy Network Segment, we aim to provide value throughout the entire pharmaceutical supply
chain. Our businesses include community pharmacy operations, a pharmaceutical network to support pharmacy
management, pharmaceutical manufacture and marketing, and support services to help general pharmacies transition
into family pharmacies using the LINE communication app.
In the Community Pharmacy Business, although the prescription unit price declined due to the impact of the NHI drug
price and dispensing fee revisions, the prescription count rose on the back of the contribution of stores newly opened
and acquired. During the nine months ended December 31, 2022, the Company opened six new community pharmacies,
including five inside medical malls, and acquired one store (one company) through stock acquisition. As of December
31, 2022, the Company had 429 community pharmacies, one care plan center, and nine drug/cosmetic stores.
In the Pharmaceutical Network Business, the number of new network affiliates continued to grow steadily amid risingdemand for business efficiency at pharmacies as pharmacists further concentrated on interpersonal work due to theimpact of dispensing fee revisions and other factors. As of December 31, 2022, pharmaceutical network affiliates totaled
8,555, comprising 429 Group pharmacies and 8,126 general network affiliates (an increase of 1,154 from March 31,2022).
In the Manufacture and Market Pharmaceuticals Business, we offered 90 products (44 ingredients) as of December
31, 2022. We supplied these to 2,042 general network affiliates (an increase of 344 from March 31, 2022), in addition
to Group pharmacies.
In the Digital Shift Business, the number of pharmacies using our service and those having placed orders grew steadily,with the former reaching 3,071 as of December 31, 2022 (an increase of 2,160 from March 31, 2022) and the latter
3,381 (an increase of 1,738 from March 31, 2022).
As a result, segment sales for the nine months ended December 31, 2022 were 78,078 million yen (+2.8% YoY), andoperating profit was 4,299 million yen (-7.8% YoY).
2) Leasing and Facility-related Segment
In the Leasing and Facility-related Segment, real estate lease revenue was generally firm, but segment sales were
down 0.5% YoY to 2,448 million yen, mainly due to an impact from the timing of the recording of sales, as the completionof construction projects will be concentrated in Q4. On the profit side, the segment recorded an operating loss of 97
million yen (operating profit of 53 million yen in the same period of the previous fiscal year) due to factors such as higher
labor expenses resulting from an increase in the number of employees to strengthen sales, and increased advertisingexpenses accompanying aggressive sales promotion activities for the Wisteria serviced residences for the elderly andsupport services for physicians establishing their own practices.
As of December 31, 2022, Wisteria Senri-Chuo had an occupancy rate of 72.0% (59 out of 82 units occupied), andWisteria Minami-Ichijo an occupancy rate of 71.6% occupancy rate (83 out of 116 units occupied). The overall2Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2022

occupancy rate at the five serviced residences for the elderly stood at 81.8%. Moving forward, we will continue toaggressively conduct sales activities that incorporate COVID-19 countermeasures in an effort to achieve our year-end
occupancy target rate of 90%.
3) Meal Catering Segment
In the Meal Catering Segment, the number of meals supplied declined due to the impact of COVID-19 and grossmargins fell due to higher purchase prices. Segment sales were 1,701 million yen (-2.9% YoY), and the operating loss
was 55 million yen (operating profit of 7 million yen in the same period of the previous fiscal year).
4) Other Segment
The Other Segment provides home-visit nursing care. Segment sales were 228 million yen (-1.5% YoY), and theoperating loss was 14 million yen (operating loss of 10 million yen in the same period of the previous fiscal year).

(2) Explanation of Financial Position
Total assets as of December 31, 2022, were 68,520 million yen, an increase of 5,579 million yen from March 31, 2022.
Current assets amounted to 22,893 million yen, up 4,192 million yen from March 31, 2022. This mainly reflected increases
in cash and deposits and merchandise. Non-current assets totaled 45,626 million yen, an increase of 1,386 million yen
from March 31, 2022. This is mainly attributable to an increase in leased assets (net) included in “Other, net” underproperty, plant and equipment,
Total liabilities were 54,395 million yen, up 4,740 million yen from March 31, 2022. Current liabilities totaled 24,341 million
yen, an increase of 3,905 million yen from March 31, 2022. This was mainly due to increases in accounts payable-tradeand short-term borrowings. Non-current liabilities totaled 30,053 million yen, an increase of 834 million yen from March
31, 2022. The main factor here was an increase in lease obligations included in “Other” under non-current liabilities, which
offset a decrease in long-term borrowings.
Net assets were 14,125 million yen, an increase of 838 million yen from March 31, 2022. 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, 2023, which wasannounced on May 6, 2022.

3

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2022

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet(Millions of yen)
Nine months ended
December 31, 2022
(as of December 31, 2022)

Fiscal year ended
March 31, 2022
(as of March 31, 2022)
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Unearned revenue from sale of accounts
receivable
Purchased receivables - dispensing fees

8,201
2,891

9,594
3,866

954

1,017

443

448

Merchandise
Raw materials

4,765
14

5,936
20

Work in process
Supplies

1
76

2
82

Other
Allowance for doubtful accounts

1,355
(3)

1,936
(10)

Total current assets

18,701

22,893

Buildings and structures, net
Land13,408
8,847

13,2808,929

Construction in progress
Other

202
2,165

138
4,490

Total property, plant and equipment

24,624

26,83812,254401

11,527519

Non-current assets
Property, plant and equipment

Intangible assets
Goodwill
Software
Other

111

104

12,767

12,151

Investment securities
Guarantee deposits

155
3,052

164
3,119

Deferred tax assets
Other

2,894
764

2,566
806

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(19)

(19)

Total investments and other assets

6,848

6,636

44,23945,626

62,941

68,520Total non-current assets
Total assets

4Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2022

(Millions of yen)
Nine months ended
December 31, 2022
(as of December 31, 2022)

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

9,680
1,016

12,3002,664

Current portion of long-term borrowings
Income taxes payable

4,756
617

4,871
104

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

1,528

807

38

12

2,798

3,581

Total current liabilities

20,43524,341Long-term borrowings
Provision for retirement benefits for directors(and other officers)
Provision for share awards for directors (andother officers)
Retirement benefit liability

22,891

20,441

600

630

210

235

3,752

3,998

Other

1,763

4,747

Non-current liabilities

Total non-current liabilities

29,21930,05349,65454,395

Share capital
Capital surplus

2,128
1,182

2,128
1,182

Retained earnings
Treasury shares

10,393(326)

11,190(326)

Total shareholders' equity

13,377

14,174

(7)

(1)

0
(102)

7
(87)

(108)

(81)

Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets

5

17

32

13,286

14,12562,941

68,520Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2022

(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, 2021
(from April 1, 2021
to December 31, 2021)
79,86846,425(Millions of yen)
Nine months ended
December 31, 2022
(from April 1, 2022
to December 31, 2022)
81,87847,591Gross profit

33,44334,287

Selling, general and administrative expenses

30,37931,942

Operating profit

3,063

2,344

Non-operating income
Interest and dividend income

65Outsourcing service income
Rental income from facilities

58
80

59
101

Subsidy income
Miscellaneous income

398
102

197
59

Total non-operating income

647

423

Non-operating expenses
Loss on sale of receivables

41

41Interest expenses
Miscellaneous losses

140
44

206
20

Total non-operating expenses

225

268

3,485

2,499

3
112

－

Gain on sale of businesses

16－

Total extraordinary income

1317

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

Extraordinary losses
Loss on sale of non-current assets

7

12

0

Loss on retirement of non-current assets
Impairment losses

14
90

51
18

Loss on store closings
Other

16
2

14
18

Total extraordinary losses

136

103

Profit before income taxes

3,480

2,403

Income taxes - current

821

855

Income taxes - deferred

532

338

Total income taxes

1,353

1,194

Profit

2,126

1,209

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

6

(18)

14

2,144

1,195

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2022

Consolidated Statement of Comprehensive Income

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income

Nine months ended
December 31, 2021
(from April 1, 2021
to December 31, 2021)
2,126(Millions of yen)
Nine months ended
December 31, 2022
(from April 1, 2022
to December 31, 2022)
1,209

14

5

2

6

11

14

29

26

Comprehensive income

2,155

1,235

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

2,173

1,221

(18)

14

7

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Nine Months Ended December 31, 2022

(3) Notes to Quarterly Consolidated Financial Statements(Notes to going concern assumptions)None to be reported.
(Notes in the event of significant changes in shareholders’ equity)
None to be reported.
(Segment information)
I. Nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021)
Information on sales and profit (loss) by reporting segment
Reporting segment
Community Leasing andPharmacy
FacilityNetwork
relatedMeal
Catering

Other

Total

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

Net sales
Sales to externalcustomers
Intersegment sales ortransfers

75,985

1,897

1,752

232

79,868－79,868

0

563

－

－

563

(563)

－

Total

75,986

2,461

1,752

232

80,432(563)

79,868Segment profit (loss)

4,663

53

7

(10)

4,713

(1,650)

3,063

Notes: 1. The negative 1,650 million yen adjustment to segment profit (loss) includes 182 million yen in elimination ofintersegment transactions and 1,832 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, 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.

8