SHIP HEALTHCARE HOLDINGS,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥333.38B
• Operating Income: ¥8.18B
• Net Income: ¥5.32B
• EPS: ¥58.00

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

Ship Healthcare Holdings reported FY2026 Q2 consolidated results under JGAAP with steady top-line growth but modest profit expansion and thin margins typical of a healthcare distribution and solutions model. Revenue rose 7.5% YoY to ¥333.4bn, while operating income increased 5.6% to ¥8.18bn, indicating slight negative operating leverage as operating growth trailed sales growth. Gross profit of ¥28.01bn implies an 8.4% gross margin, consistent with a high-volume, low-margin distribution mix and project business. Operating margin stood at roughly 2.45%, and ordinary income reached ¥8.72bn, exceeding operating income by ¥0.54bn due to net non-operating gains despite ¥0.25bn in interest expense. Net income was ¥5.43bn, down 1.9% YoY, reflecting either higher taxes, minority interests, or mix effects; the implied effective tax rate from disclosed figures approximates the mid-30% range, although the “0.0%” rate shown in calculated metrics appears to be an unreported placeholder. DuPont analysis highlights a low net margin (1.63%), sound asset turnover (0.926x), and moderate leverage (assets/equity ≈ 2.46x), yielding a calculated ROE of 3.72% that aligns with the reported figure. Earnings quality appears fair with OCF/Net Income of 1.18x and interest coverage a robust 32.7x, underscoring low financial stress. Liquidity is adequate with a current ratio of 138% and quick ratio of 126%, backed by sizeable current assets of ¥259.5bn. The balance sheet shows total equity of ¥146.2bn against total assets of ¥360.0bn, implying an equity ratio near 41% (the reported 0.0% equity ratio likely reflects non-disclosure rather than an economic zero). Working capital is ample at ¥71.4bn, though OCF suggests a working capital outflow consistent with revenue growth. Free cash flow cannot be reliably assessed because investing cash flows are unreported (the 0 values are placeholders), and the indicated FCF and dividend metrics should not be interpreted as actual zeros. Financing cash outflows of ¥9.16bn suggest debt reduction and/or shareholder returns, but detailed attribution is unavailable. Overall, the company maintains resilient cash generation relative to earnings, prudent leverage, and strong interest coverage, but low margins and muted ROE constrain profitability. The near-term outlook hinges on cost pass-through, project execution, and working capital discipline to defend margins as sales grow.

Profitability Analysis

ROE is 3.72% via DuPont: net margin 1.63% × asset turnover 0.926 × financial leverage 2.46. Gross margin is 8.4% (¥28.01bn/¥333.39bn), reflecting a distribution- and project-heavy mix. Operating margin is 2.45% (¥8.18bn/¥333.39bn), indicating limited pricing power and cost pass-through pressure. Ordinary income margin is 2.62% (¥8.72bn/¥333.39bn), supported by net non-operating gains that more than offset ¥0.25bn interest costs. EBITDA of ¥10.90bn yields a 3.3% margin, showing modest add-back from D&A (¥2.72bn) and limited operating cushion. Operating income growth (+5.6% YoY) lagged revenue growth (+7.5% YoY), implying slight negative operating leverage from mix and/or cost inflation, with SG&A or project costs likely diluting incremental margins. Interest coverage is strong at 32.7x (operating income/interest expense), indicating profitability comfortably covers financing costs. The net income decline (-1.9% YoY) despite higher operating income suggests higher tax burden, minority interests, or non-operating normalization. Margin quality remains thin; sustaining profitability will require tighter procurement, better mix toward higher-margin services, and disciplined project risk management.

Growth Assessment

Top-line growth was solid at +7.5% YoY to ¥333.4bn, likely driven by volume expansion in core distribution and progress in solution projects. However, operating income grew only +5.6% YoY, evidencing some pressure on incremental margins. Net income declined -1.9% YoY, implying headwinds below the operating line (taxes, minorities) or adverse mix effects. Asset turnover at 0.926x is healthy and typical for a high-throughput model, supporting revenue scalability if working capital is managed. The implied effective tax rate (based on non-zero items) appears in the mid-30% range, which, if sustained, will cap net profit growth relative to operating gains. Profit quality is adequate with OCF/NI of 1.18x, though working capital likely consumed cash as sales expanded. Sustainability of revenue growth hinges on procurement stability, hospital/clinic demand, and execution of turnkey projects; supply chain normalization and vendor terms will be key. Near-term outlook: modest growth with focus on mix improvement and cost pass-through to defend operating margin around the mid-2% level. Upside could come from higher-margin services and solution contracts; downside from price competition and delayed project deliveries.

Financial Health

Total assets are ¥360.0bn, equity ¥146.2bn, and liabilities ¥231.4bn, implying assets/equity of 2.46x and an equity ratio around 40.6% (reported 0.0% likely non-disclosed). Debt-to-equity is 1.58x per provided metric, suggesting moderate leverage for the business model. Liquidity is sound: current ratio 138% and quick ratio 125.5%, supported by ¥259.5bn current assets and ¥188.0bn current liabilities. Inventories are ¥23.6bn, a manageable share of current assets for a distributor. Interest expense is modest at ¥0.25bn versus operating income of ¥8.18bn, giving strong coverage (32.7x). Ordinary income exceeds operating income, indicating some recurring non-operating income support. Overall solvency appears comfortable with ample equity and manageable leverage, though the precise cash balance is unreported in the dataset.

Cash Flow Quality

Operating cash flow of ¥6.39bn versus net income of ¥5.43bn yields OCF/NI of 1.18x, indicating acceptable cash conversion. With D&A at ¥2.72bn, implied working capital and other non-cash movements net to approximately -¥1.76bn (5.43 + 2.72 - 6.39), consistent with growth-driven receivables or inventory build. Investing cash flow is shown as 0, which should be treated as unreported; hence, free cash flow cannot be reliably calculated (the 0 FCF metric is not an economic zero). Financing cash flow of -¥9.16bn suggests net debt repayment and/or shareholder returns, but detail is unavailable. Earnings quality is reasonable given positive OCF in a low-margin model, but tighter working capital discipline could improve cash conversion. Given the project and distribution mix, quarter-to-quarter working capital volatility is a key watch-point.

Dividend Sustainability

Dividend data (annual DPS 0.00, payout 0.0%) appears unreported rather than true zeros; no conclusion can be drawn on current dividends from this dataset. Without disclosed investing cash flows, FCF coverage of dividends cannot be assessed reliably. Based on earnings and OCF, the business generates cash coverage of earnings in the period, but sustainability of any dividend policy depends on capex intensity and project cash cycles that are not disclosed here. Balance sheet capacity is moderate with an implied ~41% equity ratio and strong interest coverage, which would typically support measured shareholder returns, subject to investment needs. Policy outlook cannot be inferred from the provided figures; management guidance and historical payout patterns are required.

Risk Assessment

Business Risks:

• Thin margins in distribution and solutions businesses, vulnerable to procurement cost inflation and price competition
• Project execution risk in turnkey/solution contracts affecting delivery timing, costs, and revenue recognition
• Working capital intensity with potential receivable and inventory build during growth phases
• Dependence on healthcare demand cycles, public/private capex timing, and reimbursement environments
• Supplier concentration and availability risks impacting product costs and lead times

Financial Risks:

• Moderate leverage (D/E 1.58x) could amplify downside if profitability compresses
• Cash flow volatility from project milestones and working capital swings
• Tax rate variability affecting net income given thin net margins
• Potential increase in interest expense if rates rise, though current coverage is strong

Key Concerns:

• Operating income growth lagging revenue growth, indicating negative operating leverage
• Low ROE (3.72%) constrained by thin net margins
• Unreported investing cash flows and dividend data limit visibility on FCF and shareholder returns

Investment Implications

Key Takeaways:

• Revenue growth (+7.5% YoY) solid, but margin dilution led to only +5.6% operating income growth
• Net margin at 1.63% and ROE at 3.72% highlight profitability constraints
• OCF/NI of 1.18x supports acceptable earnings quality despite working capital outflow
• Liquidity is adequate (current ratio 138%, quick ratio 126%) and interest coverage is strong (32.7x)
• Balance sheet appears conservatively capitalized with implied equity ratio ~41%, despite reported 0.0% placeholder

Metrics to Watch:

• Operating margin progression and SG&A efficiency
• Working capital turns (receivables and inventory days) and OCF/NI ratio
• Non-operating income components and interest expense trajectory
• Order backlog/project pipeline and mix toward higher-margin services
• Capex and investing cash flows to assess true FCF

Relative Positioning: Within low-margin healthcare distribution and solutions peers, the company exhibits typical gross and operating margins, solid asset turnover, and stronger-than-average interest coverage, but ROE remains at the low end due to thin net profitability.

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