RCoverage

Medical System Network / 4350
Update Notes

Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp

This PDF document is an updated note on the company. A comprehensive version of the report on the company, including this latest update, isavailable on our website and various professional platforms.

On March 25 2020, Medical System Network Co., Ltd. announced revisions to its full-year forecast for FY03/20 consolidated
results.

Revised company forecast for FY03/20 consolidated results
Sales:

JPY105.0bn (previously JPY103.0bn)

Operating profit:

JPY1.5bn (JPY2.5bn)

Recurring profit:

JPY1.5bn (JPY2.4bn)

Net loss*:

JPY250mn (versus profit of JPY650mn)

Loss per share:
JPY8.23 (versus EPS of JPY21.39)* Net loss attributable to owners of the parent

Reasons for forecast revision
The company’o revised forecast sees full-year consolidated sales finishing JPY2.0bn ahead of its initial estimate but is projecting
shortfalls in earnings at all levels. Compared with its initial projections, the company has cut its full-year operating profit estimate
by JPY970mn, recurring profit estimate by JPY900mn, and net income estimate by JPY900mn. The upward revision to thecompanywarprojection for sales reflects solid growth in network member counts at its Pharmaceuticals Network business and, atits Dispensing Pharmacy business, increases in the number of high-value prescriptions filled and an accompanying increase in the
average value of prescriptions filled. The higher sales notwithstanding, earnings are expected to fall short of initial projections as aresult of a smaller-than-expected number of prescriptions. The measures being taken to prevent the spread of the novel
coronavirus have led to a smaller number of people than usual going in for medical checkups. The lower-than-usual attack rate ofseasonal influenza also affected results. According to the company, since the start of Q4 (January-March 2020) the number ofprescriptions filled has been running 10.3% below plan, translating into roughly JPY600mn less in gross profit. Further
aggravating the shortfall in earnings are the larger-than-expected cuts in NHI drug reimbursement prices for generic drugs
initiated in October 2019.

This note is the most recent addition to the full report.

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