Medical Data Vision Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥4.65B
• Operating Income: ¥95M
• Net Income: ¥-318M
• EPS: ¥1.46

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Verdict: Solid top-line growth but thin profitability and unclear below-the-line items make FY2025 Q3 a mixed quarter. Revenue rose 12.7% YoY to 46.50, demonstrating continued demand for the company’s healthcare data and analytics offerings. Operating income was modest at 0.95, translating to an operating margin of roughly 2.0%. Net income was 0.55, for a net margin of 1.2% and a calculated ROE of 1.9%. Gross margin stands high at 65.7%, indicating attractive unit economics, but SG&A intensity kept operating leverage limited. We cannot reliably compare margin expansion/compression in basis points due to absence of prior-period margin disclosure; the bps delta is not determinable from the provided dataset. Ordinary income is listed at 1.06, but the reconciliation with provided non-operating income/expenses and profit before tax appears inconsistent, suggesting possible extraordinary items or reporting classification differences. Despite profitability headwinds, liquidity is strong with a current ratio of 202.6% and cash of 17.08 versus current liabilities of 15.33. Leverage is conservative with D/E at 0.58x and total equity at 28.97. Earnings quality cannot be assessed because operating cash flow was not disclosed; OCF/NI is not calculable. The reported payout ratio of 473.1% likely reflects a mismatch between YTD profit and an annualized dividend policy, but dividends were not disclosed; sustainability cannot be concluded without cash flow visibility. On a DuPont basis, subdued ROE is driven primarily by a slim net margin rather than asset turnover or leverage. Forward-looking, cost discipline (SG&A normalization), monetization of data assets, and conversion of pipeline to recurring revenue are key to restoring margin traction. The balance sheet provides a buffer to invest through the P&L, but the quarter’s weak net profitability limits capital allocation flexibility absent stronger OCF. We also note data inconsistencies within the income statement lines; our analysis prioritizes the internally consistent calculated metrics provided (ROE, NPM, leverage) and the disclosed revenue and net income. In sum, growth is intact, cash liquidity is ample, but profitability quality and below-the-line clarity need improvement to support higher returns.

Profitability Analysis

ROE decomposition (DuPont): ROE 1.9% = Net Profit Margin (1.2%) × Asset Turnover (1.014x) × Financial Leverage (1.58x). The weakest link is the net margin at 1.2%, while asset efficiency is roughly neutral (turnover ~1.0x) and leverage is moderate at 1.58x. The business driver behind the thin margin appears to be elevated SG&A relative to gross profit, limiting operating leverage despite a strong gross margin of 65.7%. This likely reflects continued investment in personnel, product development, and go-to-market to support future growth. Sustainability: the gross margin profile is structurally attractive; if SG&A growth moderates below revenue growth, margin recovery is plausible, but the current quarter’s profitability looks cyclical/investment-driven rather than structural. Concerning trend flag: SG&A (31.96) appears heavy versus revenue (46.50) and gross profit (30.55), pointing to operating expense pressure; without YoY SG&A growth data, we cannot confirm if SG&A growth exceeded revenue, but the margin compression risk is present.

Growth Assessment

Top-line growth of +12.7% YoY to 46.50 indicates healthy demand for the company’s data solutions. The high gross margin (65.7%) suggests pricing power and/or a scalable data platform. However, operating income of 0.95 implies limited operating leverage in the quarter, likely due to continued investment and fixed cost absorption. Non-operating items were small on the income side (0.02) but reported non-operating expenses of 0.91 and an inconsistent profit-before-tax figure create uncertainty about one-off effects. Without segment detail or ARR/backlog, sustainability of the growth rate cannot be confirmed; recurring revenue mix and client retention will be critical. Outlook hinges on converting pipeline into recurring contracts, expanding wallet share with hospitals/insurers, and improving cost efficiency. Near term, we expect management to focus on SG&A control to translate growth into operating profit. Medium term, cross-selling analytics modules and expanding datasets can enhance ARPU and margins. Currency and commodity exposures are not material for this business model; execution and product adoption are the primary growth levers.

Financial Health

Liquidity is strong: current ratio 202.6% and quick ratio 202.6%, with cash and deposits of 17.08 covering 111% of current liabilities (15.33). No warning triggers: Current Ratio is comfortably above 1.0 and D/E at 0.58x is below the 2.0x caution threshold. Balance sheet shows total assets of 45.86 and equity of 28.97 (assets/equity leverage 1.58x), indicating conservative capital structure. Maturity mismatch risk looks low: current assets (31.06) exceed current liabilities (15.33) by 15.73 of working capital. Interest-bearing debt is unreported; given healthy liquidity and no disclosed short-term loans, near-term refinancing risk appears limited, but data is incomplete. Off-balance sheet obligations were not disclosed; we cannot assess lease and data acquisition commitments from the provided information. Overall solvency and liquidity are sound, enabling continued investment despite subdued profitability.

Cash Flow Quality

Operating cash flow (OCF) is unreported; OCF/Net Income is not calculable, so we cannot validate the conversion of earnings to cash. Free cash flow is also unreported, preventing assessment of self-funded growth capacity. Working capital details (AR, inventories) are not disclosed, limiting analysis of receivables days or potential quarter-end working capital release. No signs of working capital manipulation can be identified from the provided dataset, but the absence of OCF is a material limitation. With cash of 17.08 and strong working capital, liquidity appears adequate, but the sustainability of cash generation remains unverified.

Dividend Sustainability

Dividends were not disclosed; total dividend paid and DPS are unreported. The calculated payout ratio of 473.1% likely reflects a timing mismatch (YTD earnings vs. full-year dividend policy) rather than a literal Q3 outflow, but without cash flow data we cannot test coverage. FCF coverage is not calculable. Given current modest profitability (NI 0.55) and strong cash on hand (17.08), near-term capacity to honor a small dividend appears manageable, but longer-term sustainability depends on improving operating margin and positive OCF. Policy outlook cannot be inferred from the data provided.

Risk Assessment

Business Risks:

• Execution risk: SG&A intensity and investment pace may continue to suppress operating margins.
• Client adoption and retention risk among hospitals/insurers affecting recurring revenue stability.
• Product roadmap and data procurement risk (timely upgrades, dataset breadth and quality).
• Regulatory and data privacy risk specific to medical data handling in Japan.

Financial Risks:

• Low net margin (1.2%) and ROE (1.9%) raise risk of prolonged subscale profitability.
• Unclear below-the-line items: inconsistencies between ordinary income, non-operating lines, and profit before tax suggest potential one-offs or classification differences.
• Cash flow visibility is poor with OCF unreported; earnings quality cannot be verified.
• Potential payout strain if dividends are maintained above earnings without corresponding OCF.

Key Concerns:

• Profitability reliance on controlling SG&A to realize operating leverage.
• Data limitations: lack of cash flow statement and missing SG&A breakdown hinder assessment of cost structure.
• Any extraordinary losses or valuation effects could create earnings volatility absent disclosure detail.

Investment Implications

Key Takeaways:

• Revenue growth is healthy at +12.7% YoY, validating demand.
• Gross margin is strong at 65.7%, but operating margin is thin (~2.0%) due to heavy SG&A.
• ROE is subdued at 1.9%, driven by low net margin; asset turnover and leverage are not the main issues.
• Balance sheet is liquid (current ratio 202.6%) and conservatively levered (D/E 0.58x).
• Earnings quality and dividend sustainability cannot be judged without OCF and FCF data.
• Income statement inconsistencies suggest one-offs or classification differences; clarity on extraordinary items is needed.

Metrics to Watch:

• Operating cash flow and OCF/NI conversion (>1.0 desirable).
• SG&A growth vs revenue growth and operating margin progression (bps).
• ARR/recurring revenue mix, churn/retention, and new logo additions in healthcare providers.
• Gross margin stability and unit economics of new products/modules.
• Days sales outstanding (DSO) once receivables are disclosed.
• Any extraordinary gains/losses or reclassifications affecting below-the-line items.

Relative Positioning: Within Japan’s healthcare data/analytics space, the company exhibits strong gross margins and a solid liquidity profile but trails best-in-class peers on profitability conversion this quarter; improved SG&A efficiency and clearer cash flow disclosure are needed to close the gap.

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