MEDINET Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥810M
• Operating Income: ¥-1.45B
• Net Income: ¥-1.36B
• EPS: ¥-5.15

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Medinet Co., Ltd. (23700) reported FY2025 Q4 standalone results under JGAAP showing modest top-line growth but persistent, very large operating losses. Revenue rose 5.4% year over year to ¥810 million, indicating gradual recovery or stabilization in service demand. Gross profit was ¥112.7 million, implying a gross margin of 13.9%, which is low for a healthcare services/model-driven business and suggests limited pricing power or high direct costs. There appears to be an internal mismatch between reported revenue, cost of sales, and gross profit (revenue minus cost of sales would typically yield a higher gross profit than disclosed), which may reflect classification differences or additional cost groupings being netted at the gross line. Operating income remained deeply negative at -¥1,445 million, flat YoY, underscoring entrenched operating losses and limited operating leverage at current scale. Ordinary income was -¥1,339 million and net income -¥1,362 million, with EPS at -¥5.15, reinforcing that financial expenses are immaterial to the loss profile and that core operations drive the deficit. Depreciation and amortization were ¥114.7 million, making EBITDA -¥1,330.3 million; the EBITDA margin of -164.2% highlights a structural cost-revenue gap. On the balance sheet, total assets were ¥4,254 million against liabilities of ¥509 million, implying low financial leverage, while total equity was ¥3,777 million. The reported equity ratio is shown as 0.0% but should not be interpreted literally; it is likely unreported in XBRL. Liquidity metrics look very strong on paper (current ratio ~1,864%), but reported current assets exceed total assets, which suggests classification anomalies; the disclosed cash and equivalents figure is 0, which we treat as unreported rather than truly zero. Cash flow from operations was -¥1,413 million, broadly tracking the net loss (OCF/NI ~1.04), indicating losses are cash-consuming rather than driven by non-cash items. Investing cash outflow was -¥565 million, implying ongoing capex or strategic investments, and financing cash flows were minimal at -¥2 million. Free cash flow was a substantial outflow at -¥1,978 million, indicating the business continues to require funding absent a step-change in profitability. No dividends were paid (DPS ¥0), which is appropriate given negative earnings and FCF. Overall, while the balance sheet shows limited leverage, the magnitude and persistence of operating losses and cash burn are the central issues, and liquidity visibility is constrained by unreported cash balances. Data limitations (notably cash, equity ratio, and shares) require caution in interpreting liquidity and per-share metrics.

Profitability Analysis

ROE_decomposition: DuPont indicates ROE of -36.06% = Net margin (-168.15%) × Asset turnover (0.190x) × Financial leverage (1.13x). The negative ROE is primarily driven by an extremely negative net margin, with modest asset turnover and low leverage providing little offset. margin_quality: Gross margin at 13.9% is weak for the sector and below what would be expected for scalable service lines; this, combined with very high operating expenses, results in operating margin near -178% (operating loss of ¥1,445m on ¥810m sales). The discrepancy between revenue, cost of sales (¥655.8m), and gross profit (¥112.7m) suggests potential reclassification or other cost components affecting gross margin presentation under JGAAP single-entity reporting. operating_leverage: Operating expenses dominate the P&L, and modest +5.4% revenue growth did not translate into improved operating income (flat at -¥1,445m), signaling limited operating leverage at current volumes. With D&A at ¥114.7m and EBITDA at -¥1,330.3m, fixed cost absorption remains poor.

Growth Assessment

revenue_sustainability: Revenue of ¥810m grew 5.4% YoY, implying some stability in demand; however, the growth rate is modest off a small base and insufficient to offset the cost structure. profit_quality: Net loss of ¥1,362m and EBITDA margin of -164% indicate profitability remains distant. Ordinary loss (¥1,339m) close to operating loss implies minimal non-operating distortions; losses are operational in nature. outlook: Without a material uplift in revenues and/or structural cost reduction, profitability inflection appears unlikely near term. Key drivers would be contract wins, utilization ramp of processing facilities, and pricing/mix improvement; otherwise, continued losses and cash burn are probable.

Financial Health

liquidity: Current assets are reported at ¥5,013m versus current liabilities of ¥269m, yielding a current ratio of ~1,864% and working capital of ~¥4,744m; however, current assets exceed total assets (¥4,254m), indicating classification or reporting anomalies. Cash and equivalents are shown as 0 but should be treated as unreported, limiting true liquidity visibility. solvency: Total liabilities of ¥509m against equity of ¥3,777m indicate low leverage; the calculated financial leverage factor (1.13x) and debt-to-equity of 0.13x support solvency strength. Interest expense is negligible (¥27k), and there is no near-term interest burden risk evident. capital_structure: The company is equity-funded with minimal financial debt burden, which provides runway flexibility if liquidity is adequate; however, the ongoing cash burn necessitates either internal turnaround or future financing.

Cash Flow Quality

earnings_quality: OCF of -¥1,413m versus net income of -¥1,362m (OCF/NI ~1.04) indicates losses are largely realized in cash; limited accrual-driven distortion. Effective tax rate appears near zero due to losses. FCF_analysis: Free cash flow of -¥1,978m (OCF -¥1,413m plus investing CF -¥565m) reflects combined operating and investment outflows. Investing outlays are meaningful relative to revenue, suggesting capacity or capability investments despite current losses. working_capital: Detailed components are not disclosed; the large working capital figure (¥4,744m) stems from the current asset/current liability gap but cannot be validated due to missing cash and inventory details (inventories reported as 0 likely unreported).

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 with a payout ratio of 0%, consistent with negative earnings (EPS -¥5.15) and necessary given substantial losses. FCF_coverage: FCF coverage of dividends is effectively 0.00x due to no dividends; however, negative FCF of -¥1,978m indicates distributions are not feasible. policy_outlook: Continuation of a no-dividend policy is likely until sustained positive earnings and free cash flow are achieved; priority should remain on funding operations and potential balance sheet reinforcement.

Risk Assessment

Business Risks:

• Commercialization and scale-up risk in cell therapy/medical services, with modest revenue growth insufficient to absorb fixed costs
• Pricing and reimbursement pressures leading to structurally low gross margins
• Customer concentration or volume volatility risk typical for specialized medical service providers
• Execution risk in improving utilization and operating efficiency
• Regulatory and clinical environment changes impacting service demand

Financial Risks:

• High and persistent operating cash burn (OCF -¥1.4bn; FCF -¥2.0bn)
• Liquidity visibility limited due to unreported cash balance, complicating runway assessment
• Potential need for external financing if losses persist
• Accounting presentation inconsistencies (e.g., current assets exceeding total assets) reducing analytical transparency

Key Concerns:

• Sustained large operating losses (operating loss -¥1.445bn) with flat YoY trend
• Low gross margin (13.9%) and negative EBITDA margin (-164%)
• Significant negative free cash flow (-¥1.978bn)
• Data gaps (cash, equity ratio, shares) constraining precise liquidity and per-share analysis

Investment Implications

Key Takeaways:

• Top-line grew 5.4% YoY to ¥810m, but scale remains insufficient to cover fixed costs
• ROE is sharply negative at -36.06%, driven by extreme net loss margin
• Balance sheet leverage is low (D/E ~0.13x), but cash runway cannot be assessed from disclosed data
• Free cash flow outflow of ~¥2.0bn underscores funding needs absent operating turnaround
• Reported liquidity ratios are very high but rely on data with internal classification inconsistencies

Metrics to Watch:

• Cash and equivalents and monthly cash burn/runway (currently unreported)
• Order intake/contract pipeline and utilization rates to drive revenue scale
• Gross margin trajectory and cost structure adjustments (OPEX discipline)
• OCF trend and capex intensity (investing CF) impacting FCF
• Any financing actions (equity/debt) and covenant/going-concern disclosures

Relative Positioning: Within Japan-listed small-cap healthcare service/biotech-adjacent names, Medinet exhibits lower profitability and weaker cash generation than profitable peers, offset by low financial leverage; improvement hinges on scaling revenues and structurally reducing the cost base.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis