CareNet, Inc.

Briefing Materials for Financial Results
for the Six Months Ended June 30, 2024
Katsuhiro Fujii, President

Contents

1. Business Model
2. Mid-term Management Vision 2026
Progress Report
3. Financial Results for the Six Months Ended
June 30, 2024

2

Business Model【Contents】
1. Business Model
2. Mid-term Management Vision 2026 Progress Report
3. Financial Results for the Six Months Ended June 30, 2024

1. Business Model

Corporate Profile
Name

CareNet, Inc.

Address

Sumitomo Fudosan Chiyoda Fujimi Bldg., 8-19, Fujimi 1-chome Chiyoda-ku, Tokyo, Japan

Established

July 1996

Employees

369 (as of June 30, 2024)

Business
activities

Medical contents services for doctors and medical professionals,
Medical and pharmaceutical business support for pharmaceutical companies

Business Activities

Corporate Philosophy

Improvement of future medical care by
information technology and imaging

Striving to create a sustainable healthysociety in the digital age

CareNet distributes practical information that isuseful in routine clinical practice to doctors andother medical professionals via the Internet andprovides pharmaceutical companies with solutions
for the effective communication of pharmaceuticalinformation.

CareNet contributes the creation of a sustainable
society that is healthy and offers comfortableworking environments for both the recipients andproviders of medical care by constantly evolving ourbusinesses through technology and enthusiasm.

4

1. Business Model

Our Business Model■ CareNet develops a variety of businesses that utilize the “doctor platform” oriented around CareNet.com.
CareNet.com
Fee payment

Providepharmaceuticalinformation

PharmaceuticalDX businessPharmaceuticalcompanies

Supportbusiness/marketing

Fee payment
Medicalplatform
business

Hospitals

Medicalprofessionals

Provide medical
education contents

Management
supportFee payment

Doctors

Introduce doctors

Outplacement
servicecompanies

The “Pharmaceutical DX business” is engaged in the service of providing doctors with information on the proper use of therapeutic drugs under contract withpharmaceutical companies, using our doctor platforms such as “CareNet.com.” Its business model relies on obtaining service income from pharmaceuticalcompanies, and it is our main business that accounts for about 90% of the total net sales of the CareNet Group (the “Group”).
The “Medical platform business” is engaged in the service of providing fee-based medical education videos to our member doctors and medical professionals.
Since becoming the first company in Japan to provide specialized information programs for doctors, we have built an extensive track record in producing medical
education programs. The business also provides information services for supporting job changes and opening businesses through group companies, with a viewto helping our member doctors’ career advancement and work-life balance improvement.
5

1. Business Model

Pharmaceutical DX BusinessBusiness model for the Pharmaceutical DX business■ CareNet has endeavored to spread the proper use of new medicine from pharmaceutical companies
through use of the doctor platform. We have partnerships with over 70 pharmaceutical companies, growing
this into the core business of the Company.
Doctor platform (CareNet.com, etc.)

Consignment
contract

Provide information
Facility DB

Doctormembers

Responses/logs

CareNet.com

Pharmaceuticalcompanies

Doctor DB

Reports on results

Main services of the Pharmaceutical DX businessIT solution for connecting doctors and pharmaceutical companies: MRPlus®
One of our core services that broadcasts video content created from the perspective that the involvement of doctors is needed to target other doctors, enabling
the analysis of doctors’ responses while creating opportunities for engagement with MRs. More than 50 pharmaceutical companies have adopted this service.

Online livestreams of seminars by Key Opinion Leaders (KOLs1) available nationwide: Online seminars
Busy doctors can watch KOL seminars without having to leave the office. Online livestreaming is a very effective way to quickly broadcast information about
new treatments nationwide. Over 500 seminars are conducted annually, and this is a core service together with MRPlus®.

Besides the above, through our group companies, CRO, SMO, and CSO, which dispatch professionals, we provide high-quality service in tandem with thedoctor platform.
1 KOL is an abbreviation for key opinion leader. KOLs refer to doctors who have wide influence in the medical industry. As part of sales promotion activities for their products, pharmaceutical companies reachout to KOLs, who are medical experts, in order to spread the latest pharmaceutical information. KOLs include doctors who are authorities in academic societies, professors at university hospitals, and directorsof large hospitals.

61. Business Model

Medical Platform Business
Main service: CareNeTV
On-demand clinical videos for self-study by medical professionals

6,481

Paying members(As of June 30, 2024)

About 20 years producing medical education programs
As Japan’s first TV station specializing in content for
medical professionals (satellite broadcasting ended in
March 2011, switching to Internet distribution), CareNet hasabundant experience in producing medical education
programs, and CareNeTV delivers programs that cater tothe specific learning needs of medical professionals.

Complete lineup of programsMore than 2,000 programs are available, with approx. 10
new programs being released every month. Packed withuplifting and useful information from leading lecturers who
are active on the front lines of clinical practice! Designed
around programs for improving clinical skills in everythingfrom primary care to specialized fields, video content isavailable for a variety of genres, including preparation for
medical specialist exams, presentations, English, andstatistics.
Fee

Monthly/5,500 yen

PPV/330 yen 7

1. Business Model

CareNet.com
Medical information website used by more than 450,000 medical professionals

Members465,614

Doctors who aremembers

232,368(As of June 30, 2024)“Medical contents” for immediate use in the field
An abundant selection of content is available for immediate use inclinical settings, including videos of procedures, patient
instructions, and explanations of relevant guidelines.

International research and news on medical care
Carefully selected articles published in leading international
journals are summarized in Japanese and are made available
together with the latest medical news in Japan to facilitate quick
and easy understanding of the current state of medical care.

8Mid-term Management Vision 2026
Progress Report【Contents】
1. Business Model
2. Mid-term Management Vision 2026 Progress Report
3. Financial Results for the Six Months Ended June 30, 2024

Progress on New Mid-term Management “Vision 2026”

2. Mid-term Management
Vision 2026 Progress Report

In response to the reform of clinical trial and drug sale processes in the pharmaceutical industry, the Grouphas designated the three years from 2024 to 2026 as a development-focused period with the aim ofaccelerating growth from 2027 and beyond.
Vision 2026
1

Growth strategy◼ An “engagement service” will be established during the period, which will contribute to sales
productivity improvement with a smaller number of MRs, and also create a model to enable efficient
clinical trials and cost reduction. By mobilizing our capabilities, the Pharmaceutical DX business willcontinue to grow in the future.
◼ We will enter the Seed Incubation business focused on intractable diseases and rare diseases.
◼ Our business portfolio will continue to be expanded through M&A.

2

Target of growth
While development is prioritized during the period, we will aim to achieve sales growth, with CAGR of
10% to 20%, through boosting group sales, improving service in the short term, and M&A, etc.
Operating profit ratio is projected to decrease to around 20% due to increased expenses resulting frominvestment in development and goodwill associated with M&A.

3

Shareholder returns◼ In terms of shareholder returns, our top priority is increasing corporate value (share price).
◼ We will implement a dividend policy that also takes into account dividend yields.

During the period from 2027, which will be positioned as a “growth period,” we will aim to achievesales growth with CAGR of above 20% and achieve recovery in the operating profit ratio.
102. Mid-term Management
Vision 2026 Progress Report

Mapping Pharmaceutical Outsourcing Market and Our Growth Strategy
Seed

30%

Pharmaceuticalcompanies

Clinical trials

Application

New
drugs

Existing brandproducts

3-7 years

1 year

3 years

7-10 years

101

2 trillion
yen

6 trillion
yen

Ph1

Ph2

Ph3

(1.5 years)(3 years)(2.5 years)

267

435

70%

MRs: 45,000

330.0 billion yen
Outsourcing
marketIssuesElimination of drugloss
• Seed funding• Low-costdevelopment andsales outsourcing
New business

CareNetstrategy(Vision 2026)

270.0 billion yen

SMO

50.0 billion yen

Improvement ofexisting business
Utilizing
doctor andhospital
networks

MR productivity
improvement• Meetings
with MRs

CSO

70.0 billion yen

Internet

70.0 billion yen

Improvement of cost efficiency of
promotions• Reach to areas and doctors thatMRs cannot cover• Cost efficiency assessment throughreach

New business

Improvement of existing business•

Engagement with KOLs
DB x Contents x Access

3 trillionyen

Ad promotion:
250.0 billion yen

900.0 billion
yen

Improvement of process efficiency to
reduce high clinical trial costs• Recruitment of clinical trial participants• Data management•
Seed Incubation
businessCRO

Long-listed
products/
generics•

ePromotion will continue to expand
doctor members and viewership
CSOs will improve productivity
through area and expertisedifferentiation and coordination with
ePromotion

The Group aims to develop an integrated business ranging from development of new pharmaceuticalproducts to clinical trial support and sales support.
[Source] Only 30% of new overseas drugs developed in Japan: “Drug Lag: Situation of Unapproved Drugs in Japan and its Characteristics,” OPIR News No. 63 (July 2021), Office of Pharmaceutical Industry Research (OPIR); Number offormulations in clinical trials, etc.: Calculated based on data from the website of Japan Pharmaceutical Manufacturers Association; Pharmaceutical sales market size: Estimated by the Company based on The Global Use of Medicines 2024,
IQVIA; CRO and SMO market sizes: Based on data from the website of Japan CRO Association; Number of MRs: Estimated by the Company based on “MR White Paper 2024,” MR Education & Accreditation Center of Japan; Ad
promotion market: Estimated by the Company based on average advertising to net sales ratio for listed pharmaceutical companies

11

Progress on Growth Strategy

2. Mid-term Management
Vision 2026 Progress Report

Development of engagement service
Pilot project with clients underway• Currently developing an approach using themes that interest target doctors based on
research and analysis on the characteristics of doctors that MRs cannot meet (use of theCompany’s DB) and results of analysis

Development of Seed Incubation business••

LinDo was featured in NHK’s “Close-up Gendai” (“Curable diseases cannot be cured!?
Why did the prolonged drug shortage occur?” broadcasted on June 18).
Invested in Medical Incubator Japan K.K.’s (MIJ) fund aimed at backing the developmentof rare disease drugs (MIJ BG2 Limited Partnership) to support LinDo’s new drug
development

Expansion of business portfolio••

Acquired a CRO company, Satt. Strengthened the functions of the Group’s CRO
business
Established Method360, Inc. Developed a structure to undertake new drug launchplanning, medical writing, and various production activities for pharmaceutical companies

We will continue to actively pursue business development for growth, aiming to accelerate growthfrom 2027 and beyond.
12

Shareholder Return

2. Mid-term Management
Vision 2026 Progress Report

Increasing shareholder (corporate) value is the Group’s top priority
1. Higher net sales and profit

We aim to increase both net sales and profit even during thedevelopment-focused period (period of expanding investment indevelopment) under Vision 2026.
2. Gradual improvement in ROE

We will gradually improve ROE by constantly increasing
net sales and profit.
We have resolved acquisition of treasury stock as part of measures toimprove shareholder value.

13

Shareholder Return (Acquition of Treasury Stock)

2. Mid-term Management
Vision 2026 Progress Report■ We resolved a share repurchase program at a meeting of the Board of Directors held on
August 13, 2024 to improve capital efficiency and implement a flexible capital policy.

Class of shares tobe acquired

Common shares of the Company

Total number ofshares to beacquired

2,343,600 shares (maximum)(5.22% of total number of shares issued excluding
treasury shares)

Total amount ofacquisition costs

1,000,000,000 yen (maximum)

Acquisition period

From August 14, 2024 to December 23, 2024

Acquisition method Market purchase on the Tokyo Stock Exchange

We will continue to consider share repurchases as one of the measures toincrease corporate value through improved capital efficiency, etc.

14

Financial Results for the Six Months
Ended June 30, 2024
【Contents】
1. Business Model
2. Mid-term Management Vision 2026 Progress Report
3. Financial Results for the Six Months Ended June 30, 2024

3. Financial Results for the Six
Months Ended June 30, 2024

Financial Year 2024 Plans■

FY2024 marks the first year to start expanding investment in business development towards
medium- to long-term growth in accordance with the “Vision 2026” disclosed in February 2024.
■ Net sales for the fiscal year ending December 31, 2024, is expected to increase mainly due togrowth in the existing business of Pharmaceutical DX. Meanwhile, due to increased
investment in development, etc. for expanding sales and profit in new business, profit isexpected to decline year over year.
(Million yen)
Fiscal year ended Fiscal year ending
December 31, 2023 December 31, 2024
Results
Forecast

YoY change

Net sales

10,235

11,60013.3%

Operating profit

2,428

2,200

-9.4%

Ordinary profit

2,467

2,200

-10.8%

Profit attributable toowners of parent

1,510

1,500

-0.7%

16

3. Financial Results for the Six
Months Ended June 30, 2024

The Six Months Ended June 30, 2024 - Financial Results Summary■

Net sales for the second quarter period increased by 2.7% year over year.
■ In accordance with Vision 2026, we started to invest in development this year. As a result,
expenses have increased both in price cost and in selling, general and administrative
expenses, leading to profit decline.
(Million yen)

Consolidated Statements of Income
Q2 2023

Q2 2024

Consolidated Balance Sheets

YoYchangeJune 30, 2024

Change fromFY2023 end

Net sales

5,014

5,149

2.7%

Current assets

10,969-6.8%

Cost of sales

1,867

2,063

10.5%

Non-current
assets

2,975

23.9%

Gross profit

3,146

3,085

-1.9%

Total assets

13,944-1.6%

Selling, generaland administrative
expenses

1,827

2,099

14.9%

Current liabilities

2,157-11.9%

1,318

986-25.2%

269

23.1%

Operating profit

Non-current
liabilities

Ordinary profit

1,337

983

-26.4%

Total liabilities

2,426

-9.0%

Total net assets

11,5170.1%

Total liabilities andnet assets

13,944-1.6%

Profit attributableto owners ofparent859

557-35.2%

17

Trends in Company-wide Performance (1)3. Financial Results for the Six
Months Ended June 30, 2024

Net sales(Million yen)
第1四半期
1Q

第2四半期
2Q

12,00010,0008,000

Full year
8,004

6,000

Full year
5,304

4,000

2,118

2,000
0

第3四半期
3Q

Full year
9,327

2,368

YoY
change 1,759
1,340 +50.9%
1,023
2,058
821

2,051

2Q
cumulative
5,149

2,257

2,171
YoY
change+16.6%

Full year
10,235

2,964

2,882
1,817

第4四半期
4Q

YoY
change+21.3%

YoY

2,482
2,487 change
-0.2%
2,526

2,222

2,667

2020年12月期
2021年12月期
2022年12月期
2023年12月期
2024年12月期
FY2020
FY2021
FY2022
FY2023
FY2024
1Q

2Q

3Q

Net sales for the second quarter
period was flat year over year(-0.2%) at 2,482 million yen, due
to sluggish growth in the
Pharmaceutical DX business.

4Q

Full year

Fiscal year ended
December 31, 2020

821

1,023

1,340

2,118

5,304

Fiscal year ended
December 31, 2021

2,058

1,759

1,817

2,368

8,004

Fiscal year ended
December 31, 2022

2,222

2,051

2,171

2,882

9,327

Fiscal year ended
December 31, 2023

2,526

2,487

2,257

2,964

10,235

Fiscal year ending
December 31, 2024

2,667

2,482

Order trends for the
Pharmaceutical DX business inthe second half of the fiscal year
have been firm, and progress forthe full year is in line with plan.
Company-wide net sales for the
first half of the fiscal year
increased by 2.7% year over year
to 5,149 million yen.

18

Trends in Company-wide Performance (2)3. Financial Results for the Six
Months Ended June 30, 2024

Operating profit(Million yen)
第1四半期
1Q

2,500

574
271
189

500
0

537
YoY
change+98.2%

692

788

626

473

1,000

563

YoY
change+23.3%

662

第4四半期
4Q

Full year
2,428

518

Full year
1,510

1,500

第3四半期
3Q

Full year
2,851

Full year
2,532

3,000

2,000

第2四半期
2Q

YoY
change-8.9%

2Q
cumulative
986

417

YoY
603 change-27.0%

849

838

715

440
545

2020年12月期
2021年12月期
2022年12月期
FY2020
FY2021
FY2022 2023年12月期
FY2023 2024年12月期
FY2024
1Q

2Q

3Q

4Q

Full year

Fiscal year ended
December 31, 2020

189

271

574

473

1,510

Fiscal year ended
December 31, 2021

849

537

626

518

2,532

Fiscal year ended
December 31, 2022

838

662

788

563

2,851

Fiscal year ended
December 31, 2023

715

603

417

692

2,428

Fiscal year ending
December 31, 2024

545

440

Full-year profit is projected todecrease this fiscal year due tothe aggressive investment indevelopment based on Vision2026.
In line with this plan, operating
profit for the second quarter
period decreased year over year
to 440 million yen.

19

Progress by Segment

3. Financial Results for the Six
Months Ended June 30, 2024

Segment Performance – Pharmaceutical DX Business (1)Net Sales(Million yen)
第1四半期
1Q

第2四半期
2Q

第3四半期
3Q

12,00010,000

Full year
7,425

8,000
6,000

Full year
4,816

Full year
8,473

Full year
9,178

2,698

2,222

第4四半期
4Q

1,945

2,688
2,064

2Q
cumulative
4,481

1,671
YoY
YoY
1,996
YoY
change 2,077
change 1,813 change 2,125 -2.3%
YoY+17.2%
change 1,600+13.3%
1,218+82.0%
2,403
879
2,299
2,016
1,932
722

4,000
2,000

0

FY2020 2021年12月期
FY2021 2022年12月期
FY2022 2023年12月期
FY2023 2024年12月期
FY20242020年12月期
1Q

2Q

3Q

4Q

Full year

Fiscal year ended
December 31, 2020

722

879

1,218

1,996

4,816

Fiscal year ended
December 31, 2021

1,932

1,600

1,671

2,222

7,425

Fiscal year ended
December 31, 2022

2,016

1,813

1,945

2,698

8,473

Fiscal year ended
December 31, 2023

2,299

2,125

Fiscal year ending
December 31, 2024

2,403

2,077

2,064

2,688

9,178

The pharmaceutical industry continues tobe in a cost sensitive environment and ismore focused on cost efficiency inordering promotional activities. To
continue and accelerate growth, it isrequired to improve the performance ofexisting business and to provide new
added-value through new services.
Apart from the above trend, the move toreform the work-styles of doctors at
hospitals began, and pharmaceuticalcompanies became cautious in theirpromotional activities in the second
quarter.
As a result, orders for the PharmaceuticalDX business in the second quarter period
were sluggish, and net sales decreased by
2.3% year over year to 2,077 million yen.
Order trends for the Pharmaceutical DX
business in the second half of the fiscal
year have been firm, and progress for thefull year is in line with plan.
21

3. Financial Results for the Six
Months Ended June 30, 2024

Segment Performance – Pharmaceutical DX Business (2)Segment profit(Million yen)
第1四半期
1Q
5,000

2Q
第2四半期

Full year
4,207

Full year
3,837

4,000
3,000

Full year
2,669

1,121

2,000

1,117

863

第3四半期
3Q

4Q
第4四半期

Full year
3,941

1,230

1,234

1,039

2Q
cumulative
1,630

858

YoY

738
441
371

1,000
0

YoY
change+78.9%YoY
YoY
789 change 879 change 863 change684+11.4%

1,064

-1.8%

1,058

-20.7%

985

945

Segment profit for the second
quarter period decreased by
20.7% year over year to 684
million yen, due to increased
costs associated with businessdevelopment and personnel
hiring, etc. based on Vision 2026.

2020年12月期
2021年12月期
2022年12月期
2023年12月期
2024年12月期
FY2020
FY2021
FY2022
FY2023
FY2024
1Q

2Q

3Q

4Q

Full year

Fiscal year ended
December 31, 2020

371

441

738

1,117

2,669

Fiscal year ended
December 31, 2021

1,064

789

863

1,121

3,837

Fiscal year ended
December 31, 2022

1,058

879

1,039

1,230

4,207

Fiscal year ended
December 31, 2023

985

863

858

1,234

3,941

Fiscal year ending
December 31, 2024

945

684

Through continuous development
investment, the Company aims toachieve medium- to long-term
growth as stated in Vision 2026.

22

3. Financial Results for the Six
Months Ended June 30, 2024

Doctors who are Members■

Continuing from the previous fiscal year, the number of doctors who are members has beensteadily increasing, reaching 232,000 as of June 30, 2024.
Number of doctor members
260,000

250,000

232,368

240,000

224,568
220,000

209,413
193,946

200,000

181,352
180,000

153,705

160,000

140,000

132,730

138,895

144,457

120,000

2016年

2016

2017年

2017

2018年

2018

2019年

2019

2020年

2020

2021年

2021

2022年

2022

2023年

2024年

～
～

0

2023 June 30, 2024
6月末

2025
2025年
(Plan)(計画)

23

3. Financial Results for the Six
Months Ended June 30, 2024

Segment Performance – Medical Platform Business (1)Net sales(Million yen)
第1四半期
1Q

第2四半期
2Q

第3四半期
3Q

Full year
1,057

1,200

Full year
854

1,000
800
600

第4四半期
4Q

Full year
487

Full year
578

276

183

192

2Q
cumulative
673

225
146
YoY
407
YoY
121
change361
146changeYoY+12.7%
238 +51.7%
122changeYoY
144 change 159 +49.7%
265
227
206
98 +10.4% 125

400
200
0

2020年12月期
2024年12月期
FY2020 2021年12月期
FY2021 2022年12月期
FY2022 2023年12月期
FY2023
FY2024
1Q

2Q

3Q

4Q

Full year

Fiscal year ended
December 31, 2020

98

144

122

121

487

Fiscal year ended
December 31, 2021

125

159

146

146

578

Fiscal year ended
December 31, 2022

206

238

225

183

854

Fiscal year ended
December 31, 2023

227

361

192

276

1,057

Fiscal year ending
December 31, 2024

265

407

Net sales in this segment for thesecond quarter period increased by
12.7% year over year to 407 million
yen mainly due to sales contribution
from the management support
business for hospitals which was
acquired last year.

24

3. Financial Results for the Six
Months Ended June 30, 2024

Segment Performance – Medical Platform Business (2)Segment profit(Million yen)
第1四半期
1Q

第2四半期
2Q

第3四半期
3Q

Full year
228

300

Full year
264

17
12

250
200
150

100

Full year
29

38 YoY
28 change
17 -7.1%
-55

50
0

△50
-50
△100
-100

83

Full year
111

88

16 YoYchange42 +238.5%
87
26
26
-30

第4四半期
4Q

YoY
change+90.9%

168

2Q
cumulative
177

YoY
change
-8.3%

65

154
22

2020年12月期
FY2020 2021年12月期
FY2021 2022年12月期
FY2022 2023年12月期
FY2023 2024年12月期
FY2024
1Q

2Q

3Q

4Q

Full year

Fiscal year ended
December 31, 2020

17

28

38

-55

29

Fiscal year ended
December 31, 2021

26

26

42

16

111

Fiscal year ended
December 31, 2022

87

88

83

-30

228

Fiscal year ended
December 31, 2023

65

168

12

17

264

Fiscal year ending
December 31, 2024

22

154

Segment profit of the Medical
Platform business for the second
quarter period decreased by 8.3%
year over year to 154 million yen, due
to aggressive investment in new
business development and personnel
hiring in the doctor career service andin the media business.

25

This material contains projections, plans, management targets, and other forward-

looking statements, etc., relating to CareNet, Inc. (the “Company”).
These statements are drawn from assumptions (information and forecasts currently
available to the Company), and it is possible that such assumptions are inaccurate
and that actual results produced may differ from those mentioned in said
statements.
Furthermore, information and data other than that concerning the Company has
been quoted from public sources, and the Company offers no guarantee regarding

the accuracy of such information.

CareNet, Inc.
Inquiries regarding IR: ir@carenet.co.jp

26