SAINT-CARE HOLDING CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥28.92B
• Operating Income: ¥1.29B
• Net Income: ¥808M
• EPS: ¥43.10

Income Statement

Balance Sheet

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

Cent.Care Holdings (2374) reported FY2026 Q2 consolidated results under JGAAP showing steady top-line growth and resilient operating earnings despite cost pressures typical of labor-intensive care services. Revenue grew 3.3% YoY to ¥28,922 million, while operating income was essentially flat at ¥1,288 million (+0.1% YoY), implying a modest contraction in operating margin pressure offset by better non-operating items and/or improved cost control. Net income rose 31.4% YoY to ¥1,062 million, a sharp acceleration relative to operating profit, indicating tailwinds from non-operating gains, financial income/cost improvements, or taxation dynamics. Gross margin was 11.7%, consistent with a service-heavy mix where personnel costs dominate and pricing power is constrained by public reimbursement frameworks. Operating margin stood at approximately 4.5% (¥1,288m/¥28,922m), while net margin printed at 3.67%, indicating a meaningful uplift at the bottom line relative to the small movement in operating profit. DuPont decomposition yields ROE of 6.17%, driven by a net margin of 3.67%, asset turnover of 0.946x, and financial leverage of 1.78x; this ROE is moderate for the sector and consistent with stable but not high-return service models. Liquidity appears strong with a current ratio of 229.4% and a quick ratio of 228.4%, supported by ¥17,071 million in current assets versus ¥7,442 million in current liabilities and working capital of ¥9,629 million. The balance sheet shows total assets of ¥30,587 million and total equity of ¥17,215 million, with total liabilities of ¥13,619 million, aligning with a debt-to-equity ratio of 0.79x and suggesting moderate leverage. Interest expense was ¥60.6 million and interest coverage is robust at 21.3x, implying ample buffer against rate or earnings shocks. Ordinary income of ¥1,367 million exceeded operating income by ¥79 million, implying positive net non-operating contributions despite interest costs. Cash flow data (OCF/ICF/FCF) were not disclosed in the provided XBRL snapshot (zeros indicate unreported), limiting assessment of earnings-to-cash conversion; consequently, calculated OCF/Net Income and FCF figures do not reflect economic reality. Depreciation and amortization were also not disclosed, causing EBITDA and related margin to show as zero and masking operating cash characteristics and capital intensity. The equity ratio was not disclosed (reported as 0.0% in the extract); however, the provided equity and asset levels imply an equity ratio around the mid-50% range if calculated conventionally. Dividend data were not disclosed; payout and DPS are shown as zero in the extract but should not be interpreted as actual values without confirmation. Overall, the company exhibits stable top-line growth, resilient operating earnings, improving bottom-line performance, solid liquidity, and manageable leverage, albeit with incomplete visibility on cash flows and capital intensity. Outlook hinges on wage inflation management, staffing retention, and the impact of long-term care (LTC) fee revisions within Japan’s public reimbursement system.

Profitability Analysis

ROE_decomposition: ROE 6.17% = Net margin 3.67% × Asset turnover 0.946 × Financial leverage 1.78. Profitability is primarily constrained by low service margins, with reasonable asset utilization and moderate leverage supporting ROE. margin_quality: Gross margin 11.7% reflects labor-heavy service model. Operating margin ~4.5% (¥1,288m/¥28,922m) was flat YoY versus operating income growth of +0.1% despite +3.3% revenue growth, indicating some cost pressure and/or a less favorable mix. Net margin of 3.67% expanded versus operating trends, aided by non-operating items and/or taxation effects. operating_leverage: Revenue +3.3% YoY and operating income +0.1% YoY suggests low operating leverage in the half; incremental margins were limited by wage and input cost inflation, partially offset by scale benefits. Ordinary income (¥1,367m) above operating income implies non-operating support to earnings.

Growth Assessment

revenue_sustainability: Revenue reached ¥28,922m (+3.3% YoY), consistent with steady demand in home- and facility-based care services underpinned by Japan’s aging demographics and stable reimbursement volumes. profit_quality: Operating income was flat YoY at ¥1,288m, while net income rose 31.4% to ¥1,062m—an improvement driven more by below-OP factors than core operating expansion. Interest expense is modest (¥60.6m) and ordinary income exceeded operating income by ¥79m, signaling supportive non-operating contributions. outlook: Medium-term growth should track service volume expansion and selective price/mix improvements tied to LTC fee revisions. Key constraints include staffing availability and wage inflation. Efficiency gains and capacity utilization could modestly enhance margins, but structural margin expansion likely remains gradual.

Financial Health

liquidity: Current assets ¥17,071m vs. current liabilities ¥7,442m yields a current ratio of 229.4% and quick ratio of 228.4%, indicating strong short-term coverage. Working capital stands at ¥9,629m, offering operating flexibility. solvency: Total assets ¥30,587m, total equity ¥17,215m, and total liabilities ¥13,619m imply moderate leverage (D/E 0.79x). Implied equity ratio by conventional calculation approximates 56% (noting the disclosed 0.0% is an undisclosed placeholder). Interest coverage is robust at 21.3x. capital_structure: Leverage is moderate and well-supported by cash-generative operations typical of care services, though undisclosed cash flow data tempers certainty. Ordinary income comfortably covers financing costs.

Cash Flow Quality

earnings_quality: OCF, ICF, and FCF were not disclosed; reported zeros indicate missing data rather than actual results. As such, OCF/Net Income and FCF metrics shown as 0.00 are not decision-useful. FCF_analysis: Without reported OCF and capex, FCF cannot be assessed. Depreciation & amortization is also undisclosed, obscuring capital intensity and maintenance capex needs for facilities and equipment. working_capital: Working capital is sizable at ¥9,629m, supporting operations and growth; however, absent cash flow statements, we cannot evaluate period-to-period working capital movements or cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio were not disclosed in the provided data (zeros are placeholders). Net income of ¥1,062m suggests capacity for distributions subject to policy, leverage, and capex requirements. FCF_coverage: Unavailable due to undisclosed OCF and capex; therefore, FCF coverage of dividends cannot be evaluated. policy_outlook: Given moderate leverage (D/E 0.79x) and stable earnings, the company could prioritize balanced shareholder returns and reinvestment; actual policy should be verified from company guidance and historical payout practices.

Risk Assessment

Business Risks:

• Dependence on Japan’s LTC reimbursement framework and periodic fee revisions
• Labor availability and wage inflation impacting margins and service capacity
• Regulatory compliance and quality-of-care standards
• Regional demand/mix shifts across service lines (home care, facility care, nursing, rehabilitation)
• Competition from national and regional care providers affecting pricing and staffing

Financial Risks:

• Potential increase in interest rates raising financing costs, albeit current coverage is strong (21.3x)
• Working capital swings impacting cash conversion in the absence of disclosed OCF
• Capex requirements for facility upgrades and equipment without visibility into D&A and capex
• Exposure to receivables from public payors affecting collection timing

Key Concerns:

• Incomplete disclosure of cash flow statements and D&A limits assessment of earnings quality and FCF
• Flat operating income despite revenue growth indicates constrained operating leverage
• Net income growth reliance on non-operating/tax effects may not be recurring

Investment Implications

Key Takeaways:

• Top-line growth of 3.3% YoY with stable operating income indicates resilient demand but tight margins
• Net income up 31.4% YoY, aided by non-operating items and/or taxation, lifting ROE to 6.17%
• Strong liquidity (current ratio 229.4%) and moderate leverage (D/E 0.79x) underpin financial stability
• Interest coverage of 21.3x provides buffer against rate and earnings volatility
• Cash flow and D&A undisclosed, limiting evaluation of cash conversion and capital intensity

Metrics to Watch:

• Operating margin and incremental margin versus revenue growth
• Staffing levels, wage inflation, and turnover rates
• LTC reimbursement fee revisions and impact on pricing/mix
• Ordinary income components (non-operating income/expenses) and sustainability
• Disclosure of OCF, capex, and D&A to assess FCF and maintenance requirements

Relative Positioning: A mid-cap Japanese long-term care services provider with solid liquidity and moderate leverage, delivering moderate ROE and thin but stable margins typical for the sector; profitability appears in line to slightly below higher-efficiency peers pending confirmation of cash flow efficiency.

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
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