SUSMED (4263) FY2026 Q2 Earnings Report

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Executive Summary

Losses narrowed year on year at each stage, indicating an improving trend in the deficit, although the Company has not yet achieved profitability. Operating loss was ¥2.86B (¥3.08B in the same period last year, a 7.1% narrowing of the deficit), ordinary loss was ¥2.83B (¥3.09B in the previous year, an 8.4% narrowing), and net loss was ¥2.72B (¥3.13B in the previous year, a 13.1% narrowing). EPS was negative ¥16.20 (negative ¥18.67 in the previous year). The narrowing loss resulted from a 16.8% decrease in research and development expenses, despite a 5.9% increase in SG&A expenses, with partial revisions to the cost structure contributing to the improvement. Revenue was not disclosed, with only ¥0.9B in revenue from the DTxPlatform segment confirmed.

Factors Affecting Performance

【Revenue】Consolidated revenue was not included in the disclosed data. By segment, DTxPlatform recorded revenue of ¥0.9B and operating income of ¥0.5B (a profit margin of 58.2%). DTxProduct recorded an operating loss of ¥1.0B despite revenue not being disclosed, making it the primary cause of the Company-wide loss.

【Profit and Loss】Operating loss was ¥2.86B, narrowing 7.1% from ¥3.08B in the same period last year. Research and development expenses decreased 16.8% from ¥1.36B to ¥1.13B, while SG&A expenses increased 5.9% from ¥2.41B to ¥2.55B, with the change in the expense composition contributing to the narrowing loss. Ordinary loss was ¥2.83B (¥2.83B in the previous year), almost at the same level as operating loss, indicating a limited impact from non-operating income and expenses. Extraordinary income of ¥0.14B (including gains from the reversal of stock acquisition rights, among other items) exceeded extraordinary losses of ¥0.02B (impairment loss), resulting in a pretax loss of ¥2.71B, narrower than ordinary loss. However, extraordinary income was attributable to temporary factors and should be distinguished from an improvement in recurring earning power. Net loss was ¥2.72B, narrowing 13.1% from ¥3.13B in the previous year. Overall, the improvement represents a narrowing of the deficit rather than declining revenue and earnings, and no determination of revenue growth or decline can be made because revenue was not disclosed.

Segment Analysis

The DTxPlatform segment recorded revenue of ¥0.9B, operating income of ¥0.5B, and a profit margin of 58.2%, demonstrating high profitability and positioning it as a business that has already made progress toward monetization. Meanwhile, the DTxProduct segment recorded an operating loss of ¥1.0B, making it the primary cause of the Company-wide loss. Company-wide expenses (general and administrative expenses not allocated to individual segments) also affected profit and loss, and costs outside the reported segments may be one factor contributing to the deficit structure.

Key Financial Indicators

【Profitability】Operating loss of ¥2.86B, ordinary loss of ¥2.83B, and net loss of ¥2.72B all narrowed year on year, but a structurally unprofitable condition continues. Annualized ROE was approximately in the negative 12% range, while annualized ROA was also negative at a similar level, indicating low capital and asset efficiency.【Cash Flow Quality】Operating cash flow (OCF) was negative ¥2.74B, almost in line with net loss of negative ¥2.72B, indicating a small divergence between accounting losses and cash outflows. The impact of accruals was limited, and the reality of the deficit was reflected directly in cash outflows.【Investment Efficiency】Capital expenditures were ¥0.02B versus depreciation and amortization of ¥0.04B, indicating that capital expenditures continue to remain below depreciation and amortization. Meanwhile, intangible assets increased 292.9% from ¥0.16B to ¥0.64B, indicating a shift toward investment in intangible assets.【Financial Soundness】The equity ratio was 97.2% (based on disclosed indicators), while current assets of ¥41.0B compared with current liabilities of ¥1.2B indicate extremely high liquidity. Cash and deposits of ¥40.1B account for the majority of total assets of ¥42.7B, and the low level of liabilities indicates strong resilience to continued losses.

Cash Flow Analysis

Operating cash flow was negative ¥2.7B, almost flat compared with negative ¥2.75B in the same period last year, and was broadly in line with net loss of ¥2.72B. Investing cash flow was negative ¥1.2B, with the primary uses of funds being the acquisition of intangible assets and payments of lease deposits. Financing cash flow was almost zero, and share repurchases were also minimal. As a result, free cash flow was negative ¥3.9B, deteriorating from the same period last year due to increased investing activity. Nevertheless, cash and deposits remained substantial at ¥40.1B, providing a high level of resilience with respect to near-term funding needs.

Quality of Earnings

Ordinary income and operating income remained at almost the same level, indicating a limited impact from non-operating income and expenses. Extraordinary income of ¥0.1B was attributable to temporary factors, including gains from the reversal of stock acquisition rights, and exceeded extraordinary losses of ¥0.0B (impairment loss), resulting in a pretax loss narrower than ordinary loss. This impairment resulted from reducing the carrying amount of Company-wide assets to their recoverable amount because OCF had remained negative, reflecting structural challenges in profitability. Since OCF and net loss were almost in line, there was little apparent improvement in profit attributable to accruals, and the income statement figures were relatively close to the underlying cash flow reality.

Shareholder Returns

Both the Q2 dividend and the full-year dividend forecast were ¥0 per share, and no dividends were paid. The payout ratio was not applicable, and no cash outflow arose from dividend payments. Share repurchases were also minimal (¥0.0B), and no meaningful shareholder returns were made. Given the continued operating deficit and negative free cash flow, maintaining a zero-dividend policy is consistent with a policy of preserving cash on hand.

Risk Factors

1. Continued negative operating cash flow and recognition of impairment losses: OCF has remained negative at ¥2.74B, and an impairment loss of ¥0.02B was recognized on Company-wide assets due to continued negative OCF. If delays in commercialization continue, there is a risk of additional impairment losses and cash consumption.

2. Recovery risk associated with investment in intangible assets: Intangible assets increased 292.9% year on year to ¥0.64B, reflecting expanded investment in software and other assets. Impairment has already occurred for certain assets, and delays in recovering the investments could lead to additional impairment losses.

3. Decline in research and development expenses and impact on competitiveness: Research and development expenses decreased 16.8% year on year, contributing to the narrowing loss. However, delays in product development or regulatory compliance in the medical and information and communications technology sectors could affect medium- to long-term competitiveness.

Industry Benchmark (For Reference; Compiled by the Company)

No industry benchmark data available

Key Takeaways from the Financial Results

1. Operating loss, ordinary loss, and net loss all narrowed year on year, confirming an improving trend accompanied by revisions to the cost structure. Meanwhile, the DTxPlatform segment achieved profitability with an operating profit margin of 58.2%, clearly illustrating that losses at DTxProduct are weighing down Company-wide earnings.

2. A strong financial base, consisting of cash and deposits of ¥40.1B and an equity ratio of 97.2%, provides high near-term financial resilience even if negative OCF continues. While investment in intangible assets is expanding, impairment has already occurred, making progress in recovering these investments a key focus going forward.

3. The dividend was ¥0 both for the previous fiscal year and in the current-period forecast, consistently serving as a capital preservation measure while losses and negative free cash flow continue.

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This report is a financial results analysis document automatically generated by AI based on XBRL financial results summary data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available financial results data. Investment decisions should be made at your own responsibility, and after consulting with a professional as necessary.

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