FALCO HOLDINGS Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.63B
• Operating Income: ¥1.08B
• Net Income: ¥794M
• EPS: ¥79.87

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

Falco Holdings Co., Ltd. (TSE: 4671) reported steady FY2026 Q2 consolidated results under JGAAP, with revenue of ¥21.63bn (+1.2% YoY) and operating income of ¥1.08bn (+10.8% YoY), indicating margin-led profit growth. Net income rose 1.1% YoY to ¥0.80bn, translating to EPS of ¥79.87. Operating margin improved to approximately 5.0%, outpacing the modest top-line growth and highlighting cost control and operating discipline. Gross profit was reported at ¥6.55bn (gross margin 30.3%); while revenue minus cost of sales implies a slightly higher gross profit, this likely reflects classification or rounding differences rather than a data issue. Ordinary income reached ¥1.18bn, and with minimal interest expense (¥2m), financial costs are not a headwind. The DuPont profile shows a net margin of 3.71%, asset turnover of 0.595, and financial leverage of 1.44x, yielding an ROE of 3.18%—modest but stable. The balance sheet is conservative with total assets of ¥36.35bn and equity of ¥25.27bn, implying an equity ratio around 69.5% (despite the reported 0.0% figure, which appears undisclosed rather than zero). Liquidity is strong with a current ratio of 245% and quick ratio of 235%, underpinned by working capital of ¥10.80bn. Interest coverage is extremely comfortable at about 539x, reflecting low debt costs. Inventory levels are small at ¥0.79bn, consistent with a service-oriented clinical testing model. Cash flow statement line items are not disclosed in this dataset (zeros indicate missing data), so free cash flow and OCF-based quality checks cannot be assessed here. Dividend data is also not disclosed; the 0 figures should not be interpreted as no dividend. Overall, the company demonstrates resilient fundamentals: mild top-line growth, improving operating efficiency, and a robust balance sheet. Key watchpoints include reimbursement pressures, test volume normalization, labor cost inflation, and the need to confirm cash generation once cash flow data are available.

Profitability Analysis

ROE_decomposition: ROE 3.18% = Net margin 3.71% x Asset turnover 0.595 x Financial leverage 1.44. The profile indicates profitability is primarily constrained by modest net margin rather than leverage or asset intensity. margin_quality: Operating margin ~4.98% (¥1,078m / ¥21,630m) improved YoY as operating income grew faster than revenue. Gross margin reported at 30.3%; SG&A implied at ~¥5.47bn (~25.3% of sales) suggests controlled overheads. Minimal interest expense (¥2m) means ordinary income closely tracks operating income. operating_leverage: Revenue +1.2% YoY vs operating income +10.8% implies positive operating leverage from cost optimization and/or mix shift to higher-margin tests. The magnitude suggests incremental margin capture but not excessive fixed-cost gearing.

Growth Assessment

revenue_sustainability: Top-line growth of 1.2% is modest and likely reflects stable test volumes with limited pricing tailwind in a regulated reimbursement environment. profit_quality: Profit growth outpaced sales via margin expansion, indicating improved efficiency or mix. Given low financial costs, earnings quality appears supported by core operations; however, confirmation awaits cash flow disclosure. outlook: Near-term outlook is cautiously positive with disciplined cost control, but structural headwinds (fee revisions, normalization of pandemic-related testing, and wage inflation) cap growth. Sustained gains depend on volume growth in routine diagnostics, new test adoption, and productivity improvements.

Financial Health

liquidity: Current assets ¥18.23bn vs current liabilities ¥7.43bn yields a current ratio of 245% and quick ratio of 235%, indicating ample short-term liquidity. solvency: Total liabilities ¥10.77bn vs equity ¥25.27bn imply low leverage (D/E ~0.43x; liabilities/assets ~29.6%). Computed equity ratio is ~69.5% (equity/assets), despite the reported 0.0% figure being undisclosed. capital_structure: Very low interest expense (¥2m) and high interest coverage (~539x) underscore a conservative capital structure with limited financial risk.

Cash Flow Quality

earnings_quality: Earnings rely primarily on operations given negligible interest burden; however, the absence of disclosed OCF and D&A prevents accrual-to-cash validation or EBITDA analysis. FCF_analysis: Free cash flow cannot be assessed as both operating and investing cash flows are undisclosed in this dataset. working_capital: Working capital of ¥10.80bn and small inventories (¥0.79bn) are consistent with services. Receivables dynamics are not provided; collection efficiency remains a watchpoint given payer mix in healthcare.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratios are not disclosed here; the 0.00 values should be treated as missing. EPS is ¥79.87, implying room for dividends in principle, subject to cash generation and policy. FCF_coverage: Not assessable due to undisclosed OCF/FCF. Balance sheet strength suggests capacity, but confirmation requires cash flow and capex data. policy_outlook: With low leverage and stable earnings, a steady or gradually progressive policy would be plausible in this industry, but no conclusion can be drawn without explicit disclosures.

Risk Assessment

Business Risks:

• Reimbursement price revisions for clinical testing in Japan reducing unit prices
• Volume normalization post-pandemic for infectious disease testing
• Intensifying competition among clinical lab service providers
• Labor shortages and wage inflation impacting SG&A
• Technology obsolescence and need to invest in advanced diagnostics
• Customer concentration among hospitals and clinics
• Regulatory and compliance risks in healthcare services

Financial Risks:

• Potential working capital strain from receivables collection cycles with medical institutions
• Capex requirements for lab equipment and IT systems impacting FCF
• Limited operating margin headroom in a regulated pricing environment
• Exposure to lease liabilities (not disclosed here) affecting fixed cost base
• Modest ROE (3.18%) potentially below cost of equity

Key Concerns:

• Cash flow data not disclosed, limiting earnings quality assessment
• Gross profit disclosure vs revenue minus cost of sales shows a small mismatch likely due to classification; needs monitoring in full filings
• Sustainability of operating margin gains amid reimbursement pressure and wage inflation

Investment Implications

Key Takeaways:

• Profit growth outpaced sales, indicating margin improvement and operating discipline
• Balance sheet is robust with an estimated ~69.5% equity ratio and minimal interest burden
• ROE at 3.18% remains modest; further margin or asset efficiency gains are needed
• Liquidity is strong (current ratio 245%, quick ratio 235%), supporting resilience
• Cash flow and dividend data are not disclosed; confirmation of FCF generation is a priority

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio
• Test volumes and pricing (impact of reimbursement revisions)
• Accounts receivable days and cash conversion
• Capex and D&A once disclosed; EBITDA trend
• Ordinary income vs operating income gap (non-operating items)
• Dividend policy disclosures and payout
• Asset turnover progression

Relative Positioning: Within Japan’s clinical testing/services peer set, Falco appears smaller than major incumbents but conservatively financed, with mid–single-digit operating margins and moderate asset turnover; balance sheet strength is a differentiator, while ROE trails peers that operate at higher margins or leverage.

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