MEDICAL SYSTEM NETWORK Co., Ltd.
Third Quarter of Fiscal Year Ending March 2024

Earnings Report
Standard Market of Tokyo Stock Exchange ; Securities Code: 4350

1

About contents covered* The contents of this report pertaining future earnings described are based on information
the company has held, and on certain assumptions supervising rational judgement, andare not what the company promises to achieve. There are numerous factors that may
cause actual earnings to differ. Caution is given to the accuracy of information, and we donot take responsibility for loss etc., as a result of misinformed information.

* Furthermore, this report is not prepared for the purposes of investment solicitation.

Readers are responsible for their own judgement in any decision regarding investments.

Please see the following link for our English information.

https://www.msnw.co.jp/eng/

2

FY3/2024 3Q : Topics and Business Overview■ 3rd Quarter Results
Net Sales remained strong, and Profits at all levels exceeded thesame period of the previous year and the plan.

Figures in parentheses indicate changes from the end of the previous FY* YoY‐ YoY change ‐＜ Community Pharmacy Network Segment ＞● Increase in Net Sales and profit(Net Sales +5.2%, Operating Profit +30.9%)

Community Pharmacy

436 pharmacies（+8）

Prescription Unit price(All pharmacies)

10,070 yen（-103 yen）*

・The unit price of prescriptions declined on the back of the end of
the transitional measures for additional fees related to community
support system.
→ Existing pharmacies unit price of technical fee -2.9%

No. of prescriptions (All pharmacies)

7,266K （+6.4%）*

No. of prescriptions (Existing pharmacies)

7,015K （+4.3%）*

・Due to category 5 migration of COVID-19, multiple infectious
disease outbreaks, prescription transmission benefits through theimpact of DX utilization, and medication follow-ups we saw;
→ No. of prescriptions at existing pharmacies +4.3％

Pharmaceutical Network Business~ Our 3 Pharmacy Support Businesses ~•No. of affiliates

9,503 affiliates （+591）

Manufacture and Market Pharmaceuticals Business‐ vs Forecast ‐•No. of ingredients

48 ingredients（+3）•

No. of products

101 products（+8）● Both of Net Sales and Profit exceeded the plan.
(Net Sales +0.9%, Operating Profit +12.8%)•

No. of affiliates

4,414 affiliates（+847）*

・No. of prescriptions filled at existing pharmacies +0.9% vs. plan
・Net increase in the number of network affiliates fell short of
expectations due to pharmacy closures and withdrawals resulting
from M&A activity. On the other hand, but the total value ofpharmaceuticals orders placed by network affiliates was largely
in line with projections, thanks to an increase in the value ofpharmaceuticals procurements by existing affiliates.

Digital Shift Business•

No. User registrations

949K（+30K）•

No. Installed pharmacies

4,445 pharmacies（+1,054)＜ Leasing and Facility related Segment ＞
Wisteria•

Occupancy rate of all 5 facilities

83.3%（+2.9%）

3

Table of Contents

Earnings Highlight・・・

5Core strategies, Business Summary

・・・

11

Earnings Forecast for FY3/2024

・・・

23

4

1
Earnings
Highlight

5

FY3/2024 3Q : Consolidated Results
FY3/2023
3Q (results)

FY3/2024
3Q (plan)

FY3/2024
3Q (results)（Unit: million yen）

YoY
ChangeChange (%)

FY3/2024
FY3/2024
3Q Progress rate Full year forecast

Net Sales

81,87885,37586,175+ 4,297+ 5.2%

100.9%EBITDA*¹

4,525

－

5,406

Profit margin+ 880+ 19.5%

－

5.5%

+ 725

+ 30.9%112.8%

3,500

+ 545

+ 21.8%112.2%

3,450

+ 498

+ 41.7%120.6%

1,650

－

－

Operating Profit
Profit margin

Ordinary Profit
Profit margin

Profit attributable toowners of parent
Profit margin

Earnings per share
（Yen）

6.3%

2,344

2,721

3,069

2.9%

3.2%

3.6%

2,499

2,713

3,044

3.1%

3.2%

3.5%

1,195

1,404

1,693

1.5%

1.6%

2.0%

*²

39.60

－

56.11

+ 16.51

113,800
6,600
5.8%

3.1%

3.0%

1.4%

+ 54.67*1 Calculated as "Operating income + Depreciation and amortization + Amortization of goodwill*2 Includes 114 million yen in subsidy income related to online qualification verification

6

FY3/2024 3Q : Results by Segment■ Net Sales（Unit: million yen）

FY3/2023
3Q(results)

FY3/2024
2Q(results)

ChangeChange (%)

81,87886,175+ 4,297+ 5.2 %

Community Pharmacy
Network Segment*¹

78,078

82,105+ 4,027+ 5.2 %

Leasing and Facility related
Segment
Meal Catering Segment
Home Visit Nursing Segment

4,378

4,579

+ 200

+ 4.6%

Adjustments

(579)

(510)

+ 69

－

2,344

3,069

+ 725

2.9 %

3.6 %

+ 0.7pt

4,299

4,965*

+ 666

5.5 %

6.0 %

+ 0.5pt

Leasing and Facility related
Segment
Meal Catering Segment
Home Visit Nursing Segment

(167)
－

74

1.6 %

－

Adjustments(1,787)－(1,970)－(183)

Net Sales（Unit: million yen）
■ Operating Profit Profit margin
in brackets

Segment Profit
Community Pharmacy
Network Segment*¹

2

*2

+ 241

－

+ 30.9 %+ 15.5 %－－*1 Community Pharmacy Business, Pharmaceutical Network Business, Manufacture and Market Pharmaceuticals Business, and Digital Shift Business*2 Transferring expenses related to the development of pharmacies from the Leasing and Equipment Related Business to the Community Pharmacy Businessfrom FY3/2024. Transfer of expenses 110 million yen

7FY3/2024 3Q : Consolidated Results Quarterly Changes■Net Sales・Operating Profit（Quarterly Changes）
Increase in the number of prescriptions filled due to category 5 migration of COVID-19, multiple
infectious disease outbreaks, prescription transmission benefits through the impact of DX utilization,and medication follow-ups. In line with these factors, we were able to see a YoY increase in profit.
（Unit: million yen）

Net sales

Operating profit※※ 2023/3 4Q: Inflation
allowance 202 million yen
including8

FY3/2024 3Q : Consolidated Balance Sheet■End of FY3/2023（Unit: million yen）

■End of FY3/2024 3Q（Unit: million yen）

Assets

66,223 Liabilities

51,735

Assets67,503 Liabilities

51,896

Current assets

20,265 Current liabilities

21,349Current assets

21,024 Current liabilities

23,736

Cash and deposits

8,141 Short-term loans*¹

6,168

Cash and deposits

8,536 Short-term loans*¹

6,550

Fixed liabilities

30,385

Fixed liabilities

28,159Fixed assets

45,958 Long-term loans

20,226

Fixed assets

46,479 Long-term loans

17,113

Tangible fixed assets

27,060 Net assets

14,488

Tangible fixed assets

28,159 Net assets

15,607

Intangible fixed assets

11,807 Share capital

2,128

Intangible fixed assets

11,238 Share capital

2,128

Goodwill

11,183 Capital surplus

1,182

Goodwill

10,558 Capital surplus

937

Investments and otherassets7,090 Retained earnings

11,606

Investments and otherassets

7,081 Retained earnings

Treasury shares(326)

Total liabilities andnet assets

66,223

Total assets

Equity ratio

21.8%

Equity ratio（Equity ratio with taking into account net cash*²*1 Includes long-term loans that will be repaid within 1 year
*2 Own capital / (Total assets – Cash and deposits)

24.9%)

Total assets

66,22367,503

12,933

Treasury shares(326)

Total liabilities andnet assets

67,503（Equity ratio with taking into account net cash*²

23.1%
26.4%)

9

FY3/2024 3Q : Consolidated Cash Flows
EBITDA*
Changes in working capital

5,406 million yen
998 million yen* Calculated by “operating profit + depreciation + amortization of goodwill”

Opening of new pharmacies
Existing pharmacies renovation costs, etc.
M&A (share acquisition, business acquisition,business transfer)(1,000) million yen(560) million yen(346) million yen

Loan amount reduced(2,730) million yen

10

2
Core
Strategies
・Business
Summary11

Repubish

FY3/2024: Core Strategies
Focused measures for the current period and Target value■
Community
Pharmacy
Business

Acquisition of prescriptions using on-line tools (LINE, prescription transmission tools)
No. of existing pharmacies prescriptions :+1.9％(YoY)■

Strengthen interpersonal services and provide quality drug treatments■

Development of new 15 pharmacies, mainly in medical malls■

Increased productivity through appropriate cost controls■

10,400 affiliates at the end of March 2024 (+1,488 )■Promote distribution improvement; Our pharmacies deliver once a day on weekdays, nodeliveries on Saturdays, and reduce urgent deliveries■

Core system renovation and renewal■

Expansion of services for affiliates

Manufacture andMarketPharmaceuticals
Business*■■

Stable supply
No. of transaction pharmacies including network affiliates : 5,000 (+1,263)

Digital ShiftBusiness*■■

No. of installed pharmacies : 5,300 (+1,909), 1 million user registrations (+360K)
Continued enhancements

Leasing and Facility related
Segment■■

Achieved 90% occupancy rate and stable operation in Wisteria
Appropriate cost control and review of labor and advertising costs

Meal Catering Segment, Home
Visit Nursing Segment■

As the impact of Corona fades, returns to normal operations and raises break-even line

Investment and Financial
Strategies■■

IT investment in building area collaboration
Secure profit through cost control while building up capital

Community
Pharmacy
Network
Segment* 3 Pharmacy
SupportBusinesses

Pharmaceuticals
NetworkBusiness*

12Community Pharmacy Business：
Trends in No. of Pharmacies
9 newoutlets（3 from acquisition）and 4 outlet closures/transfers since end of the previous FY
ポイント②Nanohana Pharmacy
Tenroku Station①Nanohana Pharmacy
Higashijujo

Hokkaido area

122
outlets

Chugoku/Shikoku

25
outlets

44
outlets

21
outlets①③②
Kyushu67
outlets

Fixed No. /results in 3Q

Full Year Plan

No. ofopenings

14 / 915

No. ofprospects
connected to
MedicalInstitutions

18 / 16

10

Tohoku area

Tokai/Hokuriku③Sakura Pharmacy Mihara

FY3/2024 （As of December 31）

Kinki

Kanto/Koshinetsu
105
outlets

52
outlets

As of December 31, 2023

■ Community pharmacy outlet no. trends of the past 10 years※

FY3/2026
midtermplan

FY3/2015

FY3/2016

FY3/2017

FY3/2018

FY3/2019

FY3/2020

FY3/2021

FY3/2022

FY3/2023

FY3/2024
3Q

Openings

10

9

8

8

5

8

7

12

8

9

ー

Closing andtransferring

(13)

(8)

(4)

(5)

(14)

(15)

(13)

(6)

(7)

(4)

ー

M&A

27

7

20

19

30

3

6

3

2

3

ー

No. of outlets

345

353

377

399

420

416

416

425

428

436

550

13

Community Pharmacy Business :Monthly Dispensing Fee（YoY)

2nd half total
all pharmacies +2.8%
existing pharmacies +0.4％

3Q total
all pharmacies +5.3%
existing pharmacies +3.3％

1st half total
all pharmacies +5.5%
existing pharmacies +3.7％
1st half total
all pharmacies +1.5%
existing pharmacies +0.1％

2022

2023

• Existing pharmacies definition: Pharmacies that have been continuously open since April 1, 2021 for the previous fiscal year and since April 1,
2022 for the current fiscal year

14

Community Pharmacy Business :Monthly Prescription Volume and Unit Price of Existing Pharmacies（YoY)
・ With the end of the transitional measures for the additional fee related to the community support system,
the unit price of prescriptions declined.
・ Increase in the number of prescriptions due to category 5 migration of COVID-19, multiple infectious
disease outbreaks, prescription transmission benefits through the impact of DX utilization, and medication
follow-ups.
2nd half total
Unit price (1.4%)
No. of prescription +1.8%

1st half total
Unit price (0.3%)
No. of prescription +4.0%

st1 half total
Unit price (1.2%)
No. of prescription +1.3%

2022

3Q total
Unit price (0.9%)
No. of prescription +4.3%

2023

15

Community Pharmacy Business : Dispensing Fee Breakdown
FY3/2023
3Q■ All pharmacies
No. of prescriptions (1,000)

Unit price(yen)

FY3/2024
3Q

ChangeChange (%)

6,828

7,266

+ 437

+ 6.4%

Drug charge perprescription

7,733

7,709

(24)

(0.3%)

Technical fee perprescription

2,440

2,361

(79)

(3.3%)

10,173

10,070(103)(1.0%)

69,472

73,168+ 3,695+ 5.3%

6,729

7,015

+ 286

+ 4.3%

Drug charge perprescription

7,695

7,673

(22)

(0.3%)

Technical fee perprescription

2,444

2,373

(71)

(2.9%)

10,13910,046(93)(0.9%)

68,22770,481+ 2,254+ 3.3%

Total
Dispensing fee (million yen)

■ Existing pharmacies
No. of prescriptions (1,000)

Unit price
(yen)

Total
Dispensing fee (million yen)

*Dispensing fees are calculated based on the number of prescriptions x unit price of prescriptions

16

Community Pharmacy Business : Dispensing Fee Revision
・The weighted average number of points decreased from the end of the previous fiscal year due to theend of the transitional measures for the additional allowance related to community support system.
On the back of this, we were able to achieve year-end targets early.
・We continue to focus on interpersonal services.

17

*1
3 Pharmacy Support Businesses：

Performance Summary (as of December 31, 2023)
Supporting community pharmacies through 3 businesses : Our core Pharmaceutical Network,
Manufacture and Market Pharmaceuticals, and Digital Shift Initiative■ Progress against numerical targets for this fiscal year
Numerical Targets
for the Current Term

Pharmaceutical Network
Business

10,400 affiliates（+1,488 affiliates）

Progress（As of December 31）
9,503 affiliates+591 affiliates（From the end of the previous FY）
9,596 affiliates（As of January 31）

4,414 transacting pharmacies*2+847 pharmacies（YoY）
Manufacture and Market
Pharmaceuticals Business

5,000 transacting pharmacies*（＋1,263 pharmacies）*2 No. of transacting pharmacies is total
pharmacies that have actually transacted
business since April of each year.

5,300 installed pharmacies（+1,909 pharmacies）

4,445 installed pharmacies+1,054 pharmacies（From the end of the previous FY）

1 million registered users（+360K users）

949K registered users+300K users（From the end of the previous FY）

Digital Shift Business*1 Pharmaceutical Network Division, Pharmaceutical Manufacturing and Sales Division, Digital Shift Division

18

Pharmaceuticals Network Business:
Performance Summary (as of December 31, 2023)
Net increase in the number of network affiliates fell short of expectations due to pharmacy closures and withdrawals
resulting from M&A activity. On the other hand, the total value of pharmaceuticals orders placed by network affiliates waslargely in line with projections, thanks to an increase in the value of pharmaceuticals procurements by existing affiliates.
Full year

3Q+1,488 for
FY3/2024
target19

Manufacture and Market Pharmaceuticals Business：
101 products / 48 ingredients ( 8 products /3 ingredients were added from the end of the previous FY )・Although some orders have been suspended due to shipment adjustments, no. of new transacting pharmacies increased steadily.
✔ Compared to the same period of the previous year +847
・Shipments have resumed as needed, albeit shipment adjustments continued for some products.
Expect to fall short offull-year target.
*No. of products adjusted for shipment as of December 31: 8 products / 5 ingredients ( End of March 2023：19 products / 7 ingredients)■ Net Sales and No. of transaction
pharmacies
Net Sales

4.2 billion yen

Release Date

Product name5,000 pharmacies*

2.6 billion yen
3,231

1.8 billion yen pharmacies
1.1 billion yen■ Breakdown of sales plan for this fiscal year

4,414
pharmacies

June 2023

Azilsartan OD tablet
10mg/20mg/40mg「FELDSENF」

August 2023

olopatadine hydrochloride tablets
2.5mg/5mg「FELDSENF」①

2.23 billion yen

2,050
pharmacies

December 2023

Magmitt Tablets
250mg/330mg/500mg

January - March2024

3 products（plan）

products /ingredients

11 products /3 ingredients

1,318
pharmacies*No. of transaction pharmacies is total pharmacies that have②

April 2022 - March 2023 articles for sale11 products /4 ingredients③

Products released before March 2022

82 products /41 ingredientsactually transacted business since April of each year.

20Digital Shift Business :－940K users registered
Official LINE Account・949K users have registered and 4,445 pharmacies have installed the service.
・Focusing on strengthening functions to support medication follow-up and home operations in
preparation for the revision of medical reimbursement■ No. of users registrations andinstalled pharmacies■ Installed companies(In no particular order)
949K users

20

23

/1

2

4,445
pharmacies

21

Leasing and Facility related Segment
Wisteria Occupancy Rate Trends

All 5 buildings occupied：83.3％(End of FY 3/2024 target：
90% occupancy rate)

・In 3Q,52 new move-in and 40 move-out of Wisteria locations.
・Decrease in move-outs by strengthening consultation services, and by reviewing the new acceptancesystem at the Minami ichi-jo location.
・Reviewed Wisteria's staffing and advertising expenditures.
・Transferring expenses related to the development of pharmacies from the Leasing and Equipment Related
Segment to the Community Pharmacy Business from FY3/2024. Transfer of expenses 110 million yen.
✔ Leasing and Facility related Segment
Net Sales
2,560 million yen （YoY +4.6％）
Operating Profit 129 million yen （Operating loss for the same period of the previous FY
97 million yen）
22

3
Earnings
Forecast for
FY3/2024

23

Upwardly revised earnings forecast for the FY3/2024:

RepubishConsolidated Forecast
On November 7, 2023, the company upwardly revised its full-year forecast for the fiscal year ending March 31,2024.

(Unit: million yen)

FY3/23(Results)

FY3/24(Initial
forecast)

FY3/24(Revised
Forecast)

ChangeChange (%)

Net Sales

109,551

112,500

113,800+ 1,300+ 1.2 %EBITDA

6,122

5,600

6,600

+ 1,000

5.6 %

5.0 %

5.8 %

0.8 pt+ 17.9 %Operating Profit

3,163

2,600

3,500

+ 900

Profit margin

2.9 %

2.3 %

3.1 %

0.8 ptOrdinary Profit

3,355

2,550

3,450

+ 900

Profit margin

3.1 %

2.3 %

3.0 %

0.7 ptProfit attributable to ownersof parent

1,610

1,000

1,650

+ 650

1.5 %

0.9 %

1.4 %

0.5 pt

53.38

33.14

54.67

+ 21.53+ 34.6 %+ 35.3 %+ 65.0 %Profit margin

Earnings per share
(Yen)

－

24

Forecast for the FY3/ 2024:

Repubish

Revised Segment Performance (YOY)■ Operating Profit■ Net Sales(Unit: million yen)

(Unit: million yen)※※

※ From FY3/2024, Development sales expenses are shifted from Leasingand Facility related Segment to Community Pharmacy Business.
Amount of expenses :142 million yen

25

３
４
2024年3月期
Reference
業績予想
Materials

2626

Key points in 2024 medical fee revision■ 2024 revision rates
Overall (0.12%) ＝ medical fee +0.88% ＋ drug price (1.00%)
NHI price revision(medical fee base) (1.00%)

Medical fee +0.88%
Assessmentof wageincreases＋0.61％

Hospitalized
meals Increase in
the amount of

Efficiency
optimization ofprescription fees, etc.

＋0.06％(0.25％)①Drug price (0.97%)②Material price (0.02%)

Revisionsexcluding +0.46％（Medicine：+0.52% Dentistry：+0.57% Dispensing：+0.16％）
the above

Reference: recent medical fee revision rates (medical fee base)
Year

2012

2014

2016

2018

2019

2020

2022

2024

Medical fee (real)＋1.379

＋0.10

＋0.49

＋0.55

＋0.41

＋0.55

＋0.43

＋0.88

Dispensing
fee

＋0.46

＋0.04

＋0.17

＋0.19

＋0.12

＋0.16

＋0.08

＋0.16

Drug price (real)(1.375)(1.36)(1.33)(1.74)(0.95)(1.01)(1.37)(1.00)

Drug pricebase(6.00)(5.64)(5.57)(7.48)(2.40)(4.38)(6.69)Tax included

-

＋1.36

-

Overall (nominal)＋0.004＋0.10（0.84)＋0.48(1.19)(0.07)-(0.46)(0.94)(0.12)

27

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