MEDIUS HOLDINGS Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥72.17B
• Operating Income: ¥158M
• Net Income: ¥74M
• EPS: ¥4.88

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

Medius Holdings (3154) reported FY2026 Q1 consolidated results under JGAAP with steady top-line growth but very thin profitability and elevated financial leverage. Revenue rose 4.4% YoY to ¥72.168bn, reflecting resilient demand in its medical supplies distribution business. Gross profit was ¥8.181bn, implying an 11.3% gross margin, broadly consistent with a low-margin distribution model. Operating income was ¥158m, up 3.2% YoY, but the operating margin remained slim at approximately 0.22%, highlighting limited pricing power and tight cost control headroom. Ordinary income of ¥269m exceeded operating income by about ¥111m, indicating positive non-operating items partially offsetting interest expense of ¥35.7m. Net income increased 47.1% YoY to ¥108m, but net margin is only 0.15%, underscoring sensitivity of earnings to small changes in costs or pricing. DuPont decomposition indicates ROE of 0.54% driven by very low net margin (0.15%), moderate asset turnover (0.614x), and high financial leverage (assets/equity of 5.85x). The balance sheet shows total assets of ¥117.473bn and equity of ¥20.072bn, implying an equity ratio around 17% (although the disclosed equity ratio field is not reported). Liquidity is adequate but tight for a distributor: current ratio is 109.4% and quick ratio 92.7%, with working capital of ¥7.674bn. Inventories are ¥13.601bn; using Q1 COGS, inventory days appear roughly 20 days on a quarterly basis, which looks efficient for the sector. Interest coverage is 4.4x based on operating income, providing a cushion but not ample headroom should rates rise or margins compress. Cash flows (operating, investing, financing) and D&A are not disclosed for the quarter, limiting cash conversion and capex visibility; therefore, EBITDA metrics derived from reported D&A are not meaningful. Dividend information (DPS, payout, FCF coverage) is not provided for the quarter; policy assessment requires full-year disclosure. Overall, the quarter shows stable revenue growth and modest operating improvement, but profitability remains extremely thin and reliant on non-operating support. The high leverage magnifies equity returns but also elevates financial risk in a downturn. Visibility on cash generation is the key gap; monitoring working capital dynamics and ordinary-to-operating income quality will be essential into subsequent quarters.

Profitability Analysis

ROE_decomposition: DuPont ROE = Net Margin (0.15%) x Asset Turnover (0.614x) x Financial Leverage (5.85x) = ~0.54% ROE. The weak ROE is almost entirely a function of the very low net margin; turnover is reasonable for a distributor, and leverage is high. margin_quality: Gross margin is 11.3% (¥8.181bn/¥72.168bn). Operating margin is ~0.22% (¥158m/¥72.168bn), indicating limited operating efficiency gains. Ordinary income (¥269m) above operating income suggests supportive non-operating items (e.g., interest income, subsidies, equity method), partly offset by ¥35.7m interest expense. Net margin is 0.15%, reflecting high tax and non-operating effects on a very small operating base. operating_leverage: With such thin baseline margins, small gross margin movements or SG&A changes materially impact operating income. The 3.2% YoY growth in operating income lagged revenue growth (4.4%), suggesting limited operating leverage in the quarter. Sustained improvement likely requires procurement advantages, mix upgrades, or SG&A productivity.

Growth Assessment

revenue_sustainability: Revenue grew 4.4% YoY to ¥72.168bn, consistent with steady demand in medical supplies distribution and potential incremental share gains. Sustainability depends on hospital procedure volumes, supplier relationships, and pricing pass-through to customers. profit_quality: Profit growth (net income +47.1% YoY) stems from a low base and non-operating tailwinds; operating income rose only 3.2% YoY, lagging sales growth. The divergence between ordinary and operating income raises questions on the recurrence of non-operating gains. outlook: Assuming stable healthcare demand and continued cost discipline, low single-digit revenue growth is plausible. However, margin expansion remains challenging without mix improvement or procurement efficiencies. The near-term outlook is most sensitive to gross margin, interest costs, and any reimbursement or supplier pricing changes.

Financial Health

liquidity: Current ratio 109.4% (CA ¥89.053bn / CL ¥81.379bn) and quick ratio 92.7% indicate adequate but not robust short-term liquidity. Working capital is ¥7.674bn, which is reasonable but must be actively managed given thin margins. solvency: Total liabilities are ¥92.547bn vs equity ¥20.072bn (debt-to-equity 4.61x). Implied equity ratio is about 17% (equity/assets), acknowledging the reported equity ratio field is unreported. Interest coverage is 4.4x based on operating income, offering modest headroom. capital_structure: Leverage is high for a distributor with minimal operating margin, increasing sensitivity to interest rates and credit conditions. Ordinary income’s reliance on non-operating items partially offsets financing costs but may not be durable.

Cash Flow Quality

earnings_quality: Cash flow statements are not disclosed for the quarter; OCF/NI shown as 0.00 is not meaningful. Consequently, earnings-to-cash conversion cannot be assessed for Q1. FCF_analysis: With OCF and capex not reported, free cash flow cannot be computed. Given the working capital intensity of distribution, intra-year OCF can be volatile; full-year data will be more indicative. working_capital: Inventories are ¥13.601bn; using Q1 COGS of ¥60.976bn, inventory days are approximately 20 days on a quarterly basis, suggesting efficient inventory management. Receivables and payables are not disclosed; hence overall cash conversion cycle cannot be derived.

Dividend Sustainability

payout_ratio_assessment: Quarterly DPS and payout are not disclosed (DPS shown as 0.00 indicates unreported). With net income of ¥108m, a conservative payout would be expected given leverage and thin margins, but policy cannot be assessed on Q1 alone. FCF_coverage: FCF not disclosed; coverage cannot be evaluated. Assessment should be deferred to half-year/full-year when OCF and capex are available. policy_outlook: Given the business’s low margin and working capital needs, a prudent dividend stance would be typical in the sector; confirmation requires management guidance and full-year cash flow visibility.

Risk Assessment

Business Risks:

• Thin operating margin (~0.22%) leaves little buffer for cost inflation or pricing pressure.
• Healthcare reimbursement and procurement policy changes affecting hospital purchasing behavior.
• Supplier concentration and terms; potential changes in distributor incentives and rebates.
• Inventory obsolescence risk for certain medical devices and consumables.
• Competitive pricing pressure from peers and group purchasing organizations.
• Operational disruptions in supply chain or logistics affecting service levels.

Financial Risks:

• High leverage (liabilities/equity 4.61x) increases sensitivity to credit conditions.
• Interest rate risk given modest interest coverage (4.4x).
• Working capital swings could pressure liquidity given quick ratio of 92.7%.
• Dependence on non-operating income to lift ordinary income above operating income.
• Limited equity cushion (implied equity ratio ~17%) in the event of a downturn.

Key Concerns:

• Sustainability of non-operating contributions to ordinary income.
• Ability to improve operating margin from a very low base.
• Visibility on cash generation due to lack of quarterly cash flow disclosure.

Investment Implications

Key Takeaways:

• Top-line growth is steady (+4.4% YoY), but profitability remains very thin.
• Ordinary income benefits from non-operating items, partially masking weak operating profitability.
• Leverage is high relative to earnings capacity; interest coverage is adequate but not ample.
• Liquidity is acceptable (current ratio 109.4%) but reliant on disciplined working capital management.
• Cash flow and dividend visibility are limited pending full-year disclosures.

Metrics to Watch:

• Gross and operating margins (target >0.5% operating margin to improve resilience).
• Ordinary-to-operating income gap (quality and recurrence of non-operating gains).
• Interest coverage and effective borrowing costs.
• Working capital metrics: inventory days (~20 currently on Q1 run-rate), receivables/payables turns once disclosed.
• OCF/NI conversion and FCF once cash flow data are available.
• Equity ratio and debt-to-equity trajectory.

Relative Positioning: Within Japanese medical supplies distribution, Medius exhibits typical low gross margins but currently weaker operating margins and higher financial leverage than best-in-class peers, making execution on cost control, mix, and working capital especially critical.

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
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